Corporation Law 2024

Question 1

Define Corporation

Answer 1

A corporation is an AB
created by operation of law,
having the right of succession and the powers, attributes and properties
expressly authorized by law or incidental to its purpose

Question 2

What are the attributes of a corporation?

Answer 2

1. artificial being
2. created by operation of law
3. has the right of succession
4. has the powers, attributes, and properties (PAP) expressly authorized by law or incidental to its existence

Question 3

What are the classes of a corporation?

Answer 3

Corporations may be formed as

1. Stock Corporations
   those which have capital stock divided into shares
   and are authorized to distribute to the holders of such shares,
   the dividends or surplus profits on the basis of shares held.
2. Non-stock corporations
   one where no part of its income is distributable as dividends

Question 4

Corporators vs Incorporators

Aoi

Answer 4

corporators are those who compose a corporation as stockholders in a stock corporation or members in a non-stock corporation

Incorporators
are those stockholders/members MENTIONED in the articles of incorporation as ORIGINALLY FORMING the corporation

Question 5

When is the commencement of corporate existence?

Certificate

Answer 5

A private corporation commences its juridical personality from the Date the SEC ISSUES the certificate of incorporation under its official seal

Question 6

Corporate term - how long can a corporation exists?

Answer 6

It has PERPETUAL existence unless its aoi provides otherwise

Question 7

Minimum Capital Stock for Stock corporations - state the rule.

Easy for startup w/o Burden

Answer 7

Stock corporations shall NOT be REQUIRED to have minimum capital stock, except as otherwise specially provided by special law.

By eliminating minimum capital requirements, they make it easier for startups and small businesses to establish themselves without the burden of having to meet a specific capital threshold.

Question 8

Corporate powers
What are the General Powers (vs Specific powers)?

Inherent as LE for All C

Answer 8

General Powers
Those inherent to it as a legal entity, every corporation has the following powers (& capacities)

1. To sue & be sued under its corporate name
2. To have perpetual existence
3. To use a Corporate seal
4. To amend its AoI
5. To adopt by laws, amend or repeal
6. In case of stock corporations, to issue/sell stocks; (admit members in case of nonstock corporation)
7. To deal with (real & personal) properties including securities & bonds
8. To enter into partnership, JV & other commercial agreements with natural/juridical persons
9. To make reasonable donations
10. To establish pension & other plans for the benefit of its directors, officers, & employees
11. To exercise other powers Essential to its purpose

Question 9

Corporate powers
What are the Specific Powers (vs general powers)?

Explicit Xpress in Aoi for Eftv Admin

Answer 9

Specific powers are those expressly outlined in its governing documents for its efficient and effective administraion as provided for in its AoI

1. Power to amend corporate term - shorten or extend
2. Power to increase or decrease capital stock
3. Power to deny Pre-emptive rights
4. Power to dispose its corporate assets, including goodwill
5. Power to acquire Own Shares
6. Power to invest in another corporation
7. Power to declare dividends
8. Power to enter into management contract

Question 10

De Facto Corporations
Explain the concept.

3p RaBeC Even though F is not C

Answer 10

A “de facto corporation” refers to a legal concept that Recognizes a Business entity AS A CorporatioN even though it has NOT completed all the required formalities for incorporation under the law.

3reqs
1. good faith to incorporate
2. actual operations
3. recognition by 3rd parties

Question 11

Estoppel Corporation
Explain the concept.

RABEC but later on Corp Denies

Answer 11

Corporation by estoppel is a legal doctrine that recognizes a business entity as a corporation for specific legal purposes,
even if it failed to properly incorporate or comply with statutory requirements.

This doctrine primarily applies to situations where a third party treats an entity as a corporation and later the Corp attempts to deny its corporate status in a legal dispute.

RATIONALE:
It aims to Prevent unjust outcomes by HOLDING the Entity ACCOUNTABLE for its representations when dealing with third parties.

Question 12

Basic Principles and Doctrines in Corporation Law

1.
Doctrine of Separate Juridical Personality
- What is the General Rule
- Application as to a Director/Trustee, explain.
- Application as to a Corporate Officer, how?
- B. Application as a Stockholder, explain
- Application as to Parent or Subsidiary Corporation, state case law.

S&D personality
Shields of Dir Offcers vs PersLiab if in GF & W/in Scope Auth

Answer 12

GR:
A corporation has a separate & distinct personality from those who Represent it.

Its officers are Solidarily Liable ONLY when exceptional circumstances exist as enumerated in sec 31 of the Corporation code.

As a director/Trustee, to be Personally Liable, it must be shown that the director acted under circumstances in sec 31 of CC.

A separate corporate personality shields corporate officers acting in good faith and within their scope of authority from personal liability except for situations enumerated by law and jurisprudence, thus:

Personal liability of a corporate director, trustee or officer along (although not necessarily) with the corporation may so validly attach, as a rule, only when —
‘1. He assents
(a) to a patently unlawful act of the corporation, or
(b) for bad faith or gross negligence in directing its affairs, or
(c) for conflict of interest, resulting in damages to the corporation, its stockholders or other persons;

‘2. He consents to the issuance of watered stocks
or who, having knowledge thereof, does not forthwith file with the corporate secretary his written objection thereto;

‘3. He agrees to hold himself personally and solidarity liable with the corporation; or

‘4. He is made, by a specific provision of law, to personally answer for his corporate action.

B.
As a stockholder, ownership by a small group of stockholders of nearly all capital stock is NOT SUFFICIENT to disregard the fiction of Separate JP except if he has knowledge & took part in the criminal act.

C.
A corporation owning ALL of the stock of another corporation is not sufficient to treat these 2 separate entity as One corporation.

Question 13

Basic Principles and Doctrines in Corporation Law

2.
Doctrine of Piercing the Corporate Veil
- Concept, explain
- Application, how

Aka the Exception to SJP
Hence Disregards it
Eff: Hold them Liable

Answer 13

Concept:
This is the exception to the doctrine of Separate Juridical personality.
Hence, a stockholder/member of a corporation may be held Liable for the obligations of the corporation.

Application:

This doctrine DISREGARDS the notion that a corporation has a separate & distinct personality from the corporators composing it.

Question 14

Basic Principles and Doctrines in Corporation Law

3.
Doctrine of Limited Liability
- Concept, explain

For Obl if C, PersnLiab of Sh is Ltd to Invstmnt incaseof;
Prot PersAss of Sh Owners
Exc:FIG

Answer 14

This doctrine Protects the Personal assets of shareholders or owners of a corporation from being used to satisfy the debts or obligations of the corporation.
Exception: in case of Fraud, illegal activity or there was a Guarantee

Stockholder is liable up to the extent of his Unpaid Subscription.

Question 15

Basic Principles and Doctrines in Corporation Law

4.
Business Judgment rule
- Concept, provide case law.
- Application, case law

GR: 1) BOD is Not personally Liable ( for natv consq) if acted within parameters
EXC: in BadFaith
2) C has no J over MoB policy

Q of Policy Not E by C

Answer 15

This rule provides that the BOD/BOT has the SOLE AUTHORITY to determine policies, enter into contracts & conduct business within the scope of its charter.
Hence, questions of policy is generally not entertained by the court.

Application:
Court has no jurisdiction to interfere with the management of the corporation by the BOD.
Exception: There is bad faith on part of BOD.

Question 16

Basic Principles and Doctrines in Corporation Law

5.
Doctrine of Apparent authority
- Concept, case law
- Application, case law
- Instances where this doctrine was Not Applied
- What is the key determinant in the application of the doctrine?

Rule binds C
2ELem H&R
1.BU HOLDs staff as HAVING auth (even if its beyond staff power Actually) &
2.3P RELIES on that Reprsntn
HENCE corp is Bound by staff Acts

Rationale
To protect 3p Reasonably Relying on Corps Repreanttn

Answer 16

This doctrine provides that the corporation is Estopped from DENYING the agent’s authority if
a) corp Knowingly Permits one of its officers to act within the apparent authority or
b) corp Holds the agent out to the Public as Possessing the Power to do those actions.

Application:
A banking corporation is liable where the representation is made although the agent is secretly abusing his authority.

Not applicable:
When the principal did not commit any acts which a party relied upon.

Key:
The Acts of the Principal only and not the acts of the agent have CREATED the apparent authority.

Question 17

Basic Principles and Doctrines in Corporation Law

6.
Ultra Vires Doctrine -BynDPwrs
- Concept
- Rule
- UV act vs. an illegal Act

UVA (acts of corp) are Void&Unenfrcbl
Hence BU not bound for trx acts of C outside its scope

Answer 17

UV or “beyond the powers” refers to actions/activities undertaken by a corporation that are beyond the scope or powers
granted to it by its articles of incorporation, its charter, or the laws governing corporations.

Generally, ultra vires acts are considered VOID or unenforceable.
This means that the corporation may not be legally bound by contracts or transactions that fall outside its authorized scope.
Similarly, shareholders or directors may challenge such actions as invalid.

Example
Under the Trust Fund doctrine, the corporation has no capacity to release a subscriber from his obligation to the corporation without a valuable consideration.

Ultra vires acts focus on exceeding the corporation’s authorized powers, while illegal acts focus on violating the law.

Question 18

Basic Principles and Doctrines in Corporation Law

7.
Trust Fund doctrine
- Concept
- Application

Eg. Asset of Corp Held in Trust for benefit of Creditors

Answer 18

This principle provides that the property of the corporation is a Trust Fund managed by the directors & officers for the benefit of the corporation & payment of creditors.

In case of insolvency, the court will determine whether or not the BOD/BOT Breached their Fiduciary Duty - if yes, they will face legal consequences including personal liability for losses attributable to their actions.

Question 19

Basic Principles and Doctrines in Corporation Law

8.
Doctrine of Equality of Shares
- Concept

All Issued Sh r EQUAL w same r.o Within Same

Answer 19

Under this doctrine, all ISSUED STOCKS are Presumed EQUAL with the Same privileges and liabilities Within the SAME CLASS of shares.

The court may determine if the corporate actions or management comply with the EQUAL TREATMENT among shareholders of the Same Class.

Question 20

Nationality of Corporations

1.2
Nationality Test
- Tests to determine the nationality of corporations (4) - Regardless of the nationality of the stockholders/members

Note
The determination of a corporation’s nationality can have legal implications, especially in matters of taxation, regulation, and jurisdictional authority.

Answer 20

1. Control Test
   Nationality of the corporation is determined by the CITIZENSHIP of the CONTROLLING shareholders/members (at least 60% Filipino stocks is Filipino)
2. Incorporation venue test
   Nationality is determined by the country where the corporation was registered.
3. Principal place of business Test
   Where the key operational business is conducted determines the country it can be sued.
4. Grandfather rule
   Nationality of corporation is determined by the Computed PERCENTAGE % of Filipino Equity OWNERSHIP.

Question 21

Basic Principles and Doctrines in Corporation Law

2.2
Control Test vs Grandfather rule
- Define & explain each

• Under the Strict Rule, how do you determine the total percentage of Filipino ownership.

Answer 21

Control test is More Liberal than Grandfather rule.

Under control test, there is NO NEED to Further TRACE the ownership of the 60% Filipino stocks in the INVESTING CORPORATION because its already considered as Filipino.

Under Grandfather, the percentage of Filipino equity is Computed by ATTRIBUTING THE NATIONALITY of the 2nd TIER of OWNERSHIP to determine nationality of the shareholder.
Under STRICT grandfather rule, the COMBINED TOTALS of Investing & Investee corporations are summed up to determine the total percentage of Filipino ownership.

Question 22

Establishment and Organization of Corporations

1.4
Articles of Incorporation
- What is the procedure in the amendment of AOI?
- State the rule on effectivity
- What are the grounds for Disapproval of AOI or Amendment thereto?

MajBOD + 2/3CS
Deny if corpLawReqs not compld
Not corr forms
UnL purp

Answer 22

How to Amend AOi - 2 reqs
Any provision in the Aoi may be changed by
1. A majority vote of the BOD/BOT AND
2. Written ACCEPTANCE of the stockholders (2/3 of OUTSTANDING STOCKS OR MEMBERSHIP)

The changes shall take effect:
a) Upon APPROVAL by the SEC; or
b) If NOT ACTED upon within 6 months from the Date of Filing.

SEC will NOT approve the Aoi or its amendment if:
a) its NOT COMPLIANT with the requirements of Corporation code
b) its NOT COMPLIANT in required FORM
c) the Purpose of the corporation is ILLEGAL
d) the Certification concerning the amount of capital stock subscribed is FALSE and
e) the Required percentage of Filipino OWNERSHIP of capital stock was not complied

Question 23

Establishment and Organization of Corporations

2.4
Corporation name
- What is the rule on Registration?

Dstngshbl
Unprtctd

Answer 23

No corporate name is allowed if its a) NOT DISTINGUISHABLE from those already registered for another corporation or b) the name chosen is protected by law like “government” or “UN”.

Question 24

Establishment and Organization of Corporations

3.4
Corporation Existence
- State the rule on its commencement

Answer 24

Corporate existence or JP commences from the date SEC ISSUES the certificate of incorporation under its official seal.

Question 25

Establishment and Organization of Corporations 4.4 Continuous Non-operation - What are the effects of continuous Non-Operation? F to S Ops in 5y = revoke aoi F to Oper for 5Y = Delinqnt status 2y as Delqnt = revoke

Answer 25

1. a) For failure to formally organize or b) Failure to commence its business >> within 5 years from incorporation: Certificate of Incorporation is DEEMED REVOKED 2. For failure to Operate of at least 5 CONSECUTIVE YEARS After commencement: SEC may place the corporation under DELINQUENT STATUS after Due Notice Note: A delinquent corporation shall have a period of 2 years to resume operations. If this lapsed without action from corporation, its certificate shall be REVOKED.

Question 26

Powers of the Corporation A. General Corporate Powers & Capacity - State the 11 General powers

Answer 26

See Card #8

Question 27

Powers of the Corporation B. Specific Corporate Powers & Capacity 1.8 Power to Extend or Shorten Corporate Term - What are the 2 requirements? What is the remedy of a DISSENTING stockholder for extension of corporate term? MajBOD + 2/3 CS AppR

Answer 27

1. Approved by Majority of BOD/ BOT And 2. Approval or ratification by 2/3 of O/s capital stock or membership In cases of mergers, consolidation or changes to corporate structure, the dissenter may exercise the right of APPRAISAL. If this right is exercised, the stockholder may DEMAND that the corporation BUY BACK his shares AT FAIR VALUE. This right is for the PROTECTION of Minority shareholders.

Question 28

Powers of the Corporation B. Specific Corporate Powers & Capacity 2.8 Power to Increase or Decrease Capital Stock; Incur, Create or Increase Bonded Indebtedness MajBOD + 2/3CS SEC approves

Answer 28

3 requirements for inc/dec of Capital stock Requirements - i) Majority of BOD/ BOT and ii) Ratification of 2/3 o/s cs or membership and iii) Approval of SEC or Philipine Competition Commission

Question 29

Powers of the Corporation B. Specific Corporate Powers & Capacity 3.8 Power to Deny Pre-emptive right - state the rule. This is the right to SUBSCRIBE to all issuance of shares IN PROPORTION to their shareholdings

Answer 29

GR: Available to all stockholders Exception: when Aoi states otherwise

Question 30

Powers of the Corporation B. Specific Corporate Powers & Capacity 4.8 Sale or Other Disposition of Assets - rule? what are the 3 reqs for its exercise? MajBOD + 2/3BOD + complywCompttnAct

Answer 30

A corporation may sell, lease, pledge or dispose of its property for a VALUABLE CONSIDERATION as its BOD/BOT may deem appropriate. Reqs 3 - a) Majority BOD/BOT plus b) RATIFICATION by 2/3 o/s CS or membership AND c) compliance with Philippine Competition Act

Question 31

Powers of the Corporation B. Specific Corporate Powers & Capacity 5.8 Power to Acquire own shares - (only for Stock Corp); What are the for lawful purposes this can be applied for? 1.To Elim Fr Sh 2.To P Diss Sh

Answer 31

1. to eliminte Fractional shares 2. to collect debts to corporation due to unpaid subscription 3. to pay Dissenting stockholders (right of appraisal exercised by dissenters)

Question 32

Powers of the Corporation B. Specific Corporate Powers & Capacity 6.8 Power to Invest corporate funds in another corporation or business - rule and requirement

Answer 32

This power can be used for purposes Other than the purpose when the corporation was organized. Same 2 requirements as Extending Term But when the purpose of this investment is the same purpose as in Aoi, #2 Requirement is Not Needed

Question 33

Powers of the Corporation B. Specific Corporate Powers & Capacity 7.8 Power to Declare Dividends - What is the source of dividends and how is it paid? - reqs? - Dividends of delinquent stockholders - rule? -What is the rule on Retention of surplus profits? Exc From UnR R.E., in C,P,S forms Retentn up to 100%pdinCapMax

Answer 33

Dividends are declared out of the UNRESTRICTED R.E. It shall be payable in Cash, Property, or in Stock to all Stockholders Reqs 1. Available Unrestricted RE 2. 2reqs as above For delinquents - apply CASH dividends first to Unpaid balance, if its Stock dividends this will be withheld until full payment of subscription Surplus profits may be retained ONLY UP TO 100% of Paid In Capital EXC 1) if its for expansion projects or 2) there is loan agreement to keep it for more than 100% 0r 3) NECESSARY under the circumstances to KEEP it

Question 34

Powers of the Corporation B. Specific Corporate Powers & Capacity 8.8 Power to Enter into Management Contract - what are the conditions? MajBOd Aprvd by Both Business Up tp 5Y

Answer 34

1. approval of BOD/BOT 2. approval of BOTH managing & managed corporation's stockholders (majority vote) 3. contract shall NOT be for MORE than 5 years

Question 35

Directors / Trustees and Officers 1.11 Authority of the Board Ex CorPow Cond B Manage Pr of C

Answer 35

3 Authority/DUTY of BOD 1. Exercise the corporate powers 2. conduct all business, and 3. control all properties of the corporation

Question 36

Directors / Trustees and Officers 3.11 Independent director What are the companies VESTED with PUBLIC Interest PubliclyListd w 50M Financials bank

Answer 36

1. Corporations Listed with EXCHANGE And with Assets of 50M or more 2. Banks, quasi banks, pawnshop & Insurance and other Financial INTERMEDIARIES 3. any other determined by SEC with Public Interest

Question 37

Directors / Trustees and Officers 2.11 Term of Office D 1 T 3

Answer 37

Directors shall be elected for 1 year term Trustees shall be elected for a term NOT EXCEEDING 3 years A director who cease to be a shareholder CEASES to be a Director.

Question 38

Directors / Trustees and Officers 3.11 Independent Director Not Assctd w C that Compromise OA

Answer 38

An independent director refers to a member of a company's board of directors who is NOT ASSOCIATED with the company (eg. not employees, officers, etc) in a manner that COULD COMPROMISE their OA - objectivity and ability to act in the best interests of the corporation and its shareholders. - Usually holds the Audit committee or Governance - Known for ODM & EA - objective decision making and Enhanced Oversight - If a corp is a company VESTED w PUBLIC INterest = 20% of the BOD must be Independent directors

Question 39

Directors / Trustees and Officers 4.11 Election of Directors / Trustees a) Requisite to be elected b) What is the manner of election? Nomntd & elctd by Maj 1sh = 1vote x #of open postns

Answer 39

a) 1) Must be nominated by stockholder/member & 2) Elected either in person or through a representative AUTHORIZED by Written Proxy ( Majority Stockholders) b) - election by Ballot - For Stock corporations : a) stockholder may vote under the principle of ONE VOTE per share For EACH open director position eg. if owns 100 shares & there are 3 Open director position.> means 3 x 100 = 300 votes available for use - For Non Stock corporation : the member can cast as many votes as there are trustees position BUT member may NOT cast More than 1 vote for one candidate

Question 40

Directors / Trustees and Officers 5.11 Corporate Officers Who?

Answer 40

Pres - must be a Director Treasurer - must be Resident Secretary - must be Cit and Resident of Philippines Such other officers in the ByLaws If co is w Pub Int >> there must be compliance officer

Question 41

Directors / Trustees and Officers 6.11 Disqualification of Directors, Trustees or Officers When DQ

Answer 41

A person if within 5 years prior to Election or appointment was a) Convicted by Final judgment (Within or Without Philippines) : of offense w/ >6y imprisonment; for any RPC violation AND Sec Regulation Code violations b) OR - Found liable for FRAUDULENT acts

Question 42

Directors / Trustees and Officers 7.11 Removal of Director or Trustees How

Answer 42

Any Director or Trustee may be removed by a) 2/3 CS vote or members vote in non-stock - with or without Cause, Exc in Without Cause removal - it should not violate minority representation b) by order of SEC after notice and hearing

Question 43

Directors / Trustees and Officers 8.11 Joint & Several Liability of Directors / Trustees (or Officers)

Answer 43

Solidary liability or j&s for D/T who 1. wilfully assent to unlawful acts 2. guilty of gross negligence or Bad faith 3. caused damage to corp after having pecuniary interest in conflict w his duty as DT

Question 44

Directors / Trustees and Officers 9.11 Dealings of Directors, Trustees or Officers with the Corporation SelfDealing assume voidable unless shown as F & R or Ratfd 2/3 CS

Answer 44

A contract between Corporation and with any D/T or their relatives up to 4th civil degree is VOIDABLE at option of corporation EXC: a) presence of such party-D/T was not necessary for that contract b) vote of such D/T was not necessary for approving contract c) contract is Fair and Reasonable d) in case of Officer, contract was authorized by BOD BOT

Question 45

Directors / Trustees and Officers 10.11 Contracts with Interlocking Directors An interlocking director is someone who sits on the board of directors for two or MORE companies at the SAME time The contract between the companies should be fair and entered into at ARM'S LENGTH (without undue influence). Both companies should have FULL DISCLOSURE of the interlocking director and any potential conflicts of interest.

Answer 45

GR - Contract between 2 companies with an interlocking directors shall Not be INVALIDATED exc: 1) if contract w/ fraud 2) if interest of IntDir is substantial (>20% of CS) in one company and nominal in the other - subject to scrutiny

Question 46

Directors / Trustees and Officers 11.11 Disloyalty of a Director

Answer 46

Disloyal - when a director, BY VIRTUE of SUCH OFFICE, acquire a business opportunity which SHOULD BELONG to corporation and PREJUDICIAL to corporation >>> that director must refund the profits to the corporation EXC: if acts of that director was RATIFIED BY 2/3 CS

Question 47

Stocks 1.5 Subscription contract

Answer 47

Contract for acquisition of UNISSUED STOCK

Question 48

Stocks 2.5 Rule on Pre incorporation Subscription

Answer 48

This subscription is IRREVOCABLE for 6 months from date of subscription EXC if all other subscribers CONSENT to the revocation

Question 49

Stocks 3.5 Consideration for Stocks what forms

Answer 49

1. actual cash 2. property, tangible or not 3. labor or services 4. shares of stock from another corp

Question 50

Stocks 4.5 Rule on Transfer of Shares

Answer 50

Sh of Stocks are personal property which may be TRANSFERRED No transfer shall be valid until the transfer is recorded in the BOOKS of corporation No shares of stock w unpaid portion will be recorded in books No shares of stock shall be issued until FULL AMT & interests has been paid

Question 51

Stocks 5.5 Liability of Directors for Watered Stocks A watered stock is a type of security that is essentially worth less than its face value. It's a deceptive practice used to manipulate a company's financial picture or mislead investors.

Answer 51

Liable if Selling Stock Below Value: Dir consents to issuance of stocks for LESS THAN its par or issued value Issuing Stock for Overvalued Assets: Dir consents to issue stocks for consideration other than cash but valued IN EXCESS of FMV Have knowledge thereof

Question 52

Stockholders A. Proprietary rights 1.5 Right to Vote Prop Rights - the privileges attached to ownership of shares

Answer 52

R to participate in the control and MANAGEMENT of corporation

Question 53

Stockholders A. Proprietary rights 2.5 Right to Dividends

Answer 53

Shareholder acquires right once a FINAL DIVIDEND is Declared

Question 54

Stockholders A. Proprietary rights 3.5 Right to Inspect books & records

Answer 54

This right is based upon shareholders OWNERSHIP of assets and property of corp

Question 55

Stockholders A. Proprietary rights 4.5 Preemptive Right to SUBSCRIBE to all Issues IN PROPORTION

Answer 55

This right is to protect the shareholders proprietary and VOTING rights

Question 56

Stockholders A. Proprietary rights 5.5 Appraisal right (to seek judicial determination of share's fair value) Instances

Answer 56

Instances: 1. amendment of AOi 2. Sale, Lease, Exchange or Disposition of Corporate assets 3. merger or Consolidation 4. Investment to a different business

Question 57

Stockholders A. Proprietary rights 5.5 Appraisal right (to seek judicial determination of share's fair value) Procedures

Answer 57

Dissenter must vote AGAINST the instance Written demand for payment of the FMV of his shareholdings Valuation at Corp's expense Payment by Corp

Question 58

Stockholders B. Remedial rights - A stockholder impaired by the action of the corporation may file: 1.3 Individual suit

Answer 58

Denied Right to Inspection - this is personal

Question 59

Stockholders B. Remedial rights - A stockholder impaired by the action of the corporation may file: 2.3 Representative suit ( or Class Suit) When: - Misconduct by Management - Self-dealing (use of position for personal gain); or Breach of fiduciary duty; Waste of Corp Assets - Failure to exercise Corp rights - company did not sue 3p - Breach by Controlling shareholder

Answer 59

When the wrong is against a GROUP of STOCKHOLDERS with COMMON INTERESTS

Question 60

Stockholders B. Remedial rights - A stockholder impaired by the action of the corporation may file: 3.3 Derivative Suit When: Embezzlement by CEO

Answer 60

When the wrong is against the CORPORATION ITSELF

Question 61

Meetings of A. Board of Directors/Trustees 1.6 Kinds & Regularity

Answer 61

Regular: Monthly unless by-laws provide Special: any time upon call of President or as provided by the bylaws

Question 62

Meetings of A. Board of Directors/Trustees 2.6 Notice Requirement

Answer 62

Notice as to date, time and place must be sent 2 DAYS PRIOR to the scheduled meeting

Question 63

Meetings of A. Board of Directors/Trustees 3.6 Quorum requirement

Answer 63

GR: Majority of BOD shall be a quorum to transact a corporate business = corporate acts EXC: When bylaws require GREATER MAJORITY EXC: Election of Officers shall require Majority of BOD

Question 64

Meetings of A. Board of Directors/Trustees 4.6 Attendance in Meetings

Answer 64

Those who cant be PHYSICALLY ATTEND can participate and Vote through REMOTE communication Directors or Trustee CANNOT Attend or Vote by PROXY at board meetings

Question 65

Meetings of A. Board of Directors/Trustees 5.6 Who Presides

Answer 65

Chairman in absence, President

Question 66

Meetings of A. Board of Directors/Trustees 6.6 Rule on Abstention

Answer 66

Any D/T with POTENTIAL INTEREST in a RELATED PARTY transaction must WITHDRAW from Voting in the Approval of this related party transaction

Question 67

Meetings of B. Stockholders/members 1.8 Kinds & Regularity

Answer 67

Regular - annually fixed by-laws, if not , any date after 15Apr - at principal office Special - anytime upon call of President or as provided by-Laws

Question 68

Meetings of B. Stockholders/members 2.8 Notice Requirement

Answer 68

Notice by Means of Commmunication as provided in byLaws written electronic or as SEC allows Special meeting - 1 week at least notice

Question 69

Meetings of B. Stockholders/members 3.8 Quorum requirement

Answer 69

majority of captital stock or members

Question 70

Meetings of B. Stockholders/members 4.8 Attendance in Meetings

Answer 70

right to vote exercised by - in person - remote communication - in absentia in all meetings - may vote in person or proxy

Question 71

Meetings of B. Stockholders/members 6.8 Rule on Voting

Answer 71

cases of joint ownership of stock - consent of all co ownners necessary to vote treasury shares have no voting rights

Question 72

Meetings of B. Stockholders/members 7.8 Rules on Proxy Voting

Answer 72

proxies shall be in writing should be received by cor sec within reasonable time valid only for the meeting its intended no proxy shall be valid for more than 5 years

Question 73

Meetings of B. Stockholders/members 8.8 Rules on Voting Trust

Answer 73

certified copy filed with Org & SEC vs. Proxy ---- VT usually irrevocable & discretion of trustee while proxy is revocable & instructed by shareholder

Question 74

Mergers 1.8 Concept

Answer 74

absorption of one corp by another existing corp

Question 75

Mergers 2.8 Consequence

Answer 75

absorbing corp - continues absorbed - terminated

Question 76

Mergers 3.8 Constituent vs Consolidated Corporation

Answer 76

proposing corp intending to merge or consolidate vs the corporation formed

Question 77

Mergers 4.8 Procedure for Merger or Consolidation

Answer 77

board of each corp drafts plan approval submit articles of merger or consolidation to SEC Hearing by SEC issuance of Certificate of M C by SEC

Question 78

Mergers 5.8 Effects of Merger

Answer 78

constituents become single corp

Question 79

Mergers 6.8 Effectivity of Merger

Question 80

Mergers 7.8 Limitation

Answer 80

PCC may intervene if restricts competition

Question 81

Mergers 8.8 Allowable Merger

Answer 81

Prohibited Merger or Acquisition may be exempt fr prohibition if - gains in efficiencies - actual or imminent financial failure

Question 82

Close Corporation 1.8 Definition

Answer 82

when aoi provides - all issued stocks shall be held by NOT MORE than 20 persons - stocks are restricted as to Transfer - not Listed

Question 83

Close Corporation 2.8 Not Eligible as a Close Corporation

Answer 83

mining banks insurance public utitilities educational institution or those with Public Interest

Question 84

Close Corporation 3.8 Effect of non-recording of restriction to transfer in the articles of incorporation in the by-laws and in the stock certificate

Answer 84

Such restriction shall not be binding

Question 85

Close Corporation 4.8 Definition Liability of stockholders Actively Engaged in the Management

Answer 85

Held to strict Fiduciary duties to each other Pesonally liable for CORPORATE TORTS unless corporation has obtained Liability Insurance

Question 86

Close Corporation 5.8 Definition Effect of Absence or Improper Holding of Board Meetings

Answer 86

GR: Still valid despite absence - written consent after - valid when theres implied knowledge

Question 87

Close Corporation 6.8 Definition PreEmptive Right in close corp

Answer 87

pertains to all stocks to be issued including reissuance

Question 88

Close Corporation 7.8 Definition Right of a Withdrawing Stockholder

Answer 88

similar to Appraisal right

Question 89

Close Corporation 8.8 Petition to Dissolve

Answer 89

ay stockholder may petition SEC to dissolve

Question 90

Non-stock corporation 1.7 Definition

Answer 90

No part of income is distrubutable as dividends

Question 91

Non-stock corporation 2.7 Limitation on the Use of Generated Profits

Answer 91

Ni distribution of profits as dividends to members Reinvestment of surplus to support its mission Public benefit purpose rather than private gain

Question 92

Non-stock corporation 3.7 Purposes

Answer 92

Educational Charitable Religious

Question 93

Non-stock corporation 4.7 Non-transferability of Membership

Answer 93

By exp prov of law Membership and Rights are NON TRANSFERABLE relationship is personal

Question 94

Non-stock corporation 5.7 Election and Term of Office of Trustees

Answer 94

Not More than 15 Exc W/ independent trustee, only members of corp may be elected Term is 3 years

Question 95

Non-stock corporation 6.7 Place of Meetings

Answer 95

Principal ofce Practicable location

Question 96

Non-stock corporation 7.7 Rule on the Distribution of Assets after Dissolution

Question 97

One Person Corporation 1.12 Concept

Answer 97

Single stockholder Limited liability No minimum capital requirement Sole director and President 600K below require FS

Question 98

One Person Corporation 2.12 Who can form Restricted to Filo Cit A. Mass media B. Practice of professions C. Retail D. Mining E. Cockpits

Answer 98

Allowed 1. Natural persons 2. Trusts 3. Estates Not allowed - banks, preneed, insurance companies - natural persons practice profession - publicly listed companies -

Question 99

One Person Corporation 3.12 Excepted from OPC

Answer 99

Prohibited ent to be OPC - banks -insurance - publicky listed -Gocc

Question 100

One Person Corporation 4.12 Capital Stock

Answer 100

No minimum cap reqt No PaidUp Cap required at Incorp Suffix as OPC

Question 101

One Person Corporation 5.12 Articles of Incorporation & By-Laws

Answer 101

Both required to comply w RCC

Question 102

One Person Corporation 6.12 Corporate Name

Answer 102

InCLusion of OPC Compliance w sec naming rules

Question 103

One Person Corporation 7.12 Corporate Structure & Officers

Answer 103

Required to have nominee

Question 104

One Person Corporation 8.12 Designation of Nominee and Alternate Nominee

Answer 104

Mandatory Nom - role is to take over in case of death or incap AlterNom - backup of primary

Question 105

One Person Corporation 9.12 Minutes and Records

Answer 105

Maintain 'Minutes Book' for all official records and decisions

Question 106

One Person Corporation 10.12 Liability of Single shareholder

Answer 106

Limited liability as to Unpaid capital, not for the entire debts of corp Eg. Debts - 10M Subscribed - 1M but paid 100K, so 900K unpaid c/s Liability ia ONLY UP TO unpaid cs 900K

Question 107

One Person Corporation 11.12 Conversion of Ordinary Stock to OPC

Answer 107

Eligible when one Sholder (must ve Nat, Trust, or State only) acquires ALL o/s cap stock

Question 108

One Person Corporation 12.12 Conversion of OPC to Ordinary Stock corporation

Answer 108

Notice of conv filed w SEC W/ Applctn, amended aoi Newly converted OSC will assume liablilities of OPC as of date of conversion

Question 109

Dissolution and Liquidation of Corporation 1.6 Modes of Dissolution

Answer 109

VOL - shortenng term = Maj BOD + Maj C/S & Filing w SEC INVOL - Non use of charter - Continuous inoperation - Court order - illegal acts

Question 110

Dissolution and Liquidation of Corporation 2.6 Procedure for Voluntarily Dissolution where No creditors are affected

Question 111

Dissolution and Liquidation of Corporation 3.6 Procedure for Voluntary Dissolution where Creditors are Affected

Answer 111

Verified petition by Maj BOD filed to SEC 2/3 Approved by C/S Order of Publication Hearing in SEC - Judgement of dissolution - Asset dispositio and Payment of Debts by aptd Receiver

Question 112

Dissolution and Liquidation of Corporation 4.6 Procedure of Dissolution by Shortening Corporation Term

Answer 112

Amend AOi Submit copy of amended Aoi - directors certificate Maj BoD + 2/3 OS c/s - consent of creditors - FS

Question 113

Dissolution and Liquidation of Corporation 5.6 Involuntary Dissolution Legal Termination of a corp Against its will initiated by a 3p such as Govt

Answer 113

Non use of charter - 5 y from incorp Continuous Non-Op - Fraudulent incorp

Question 114

Dissolution and Liquidation of Corporation 6.6 Corporate Liquidation

Answer 114

Winding up of corporate affairs By Selling assets and settling Debts & distrbtng any remaining assets

Question 115

Foreign Corporation 1.7 Definition

Answer 115

One formed, organized under laws of a Country OTHER than the Philippines and whose laws allow Filipinos to conduct business in that foreign country

Question 116

Foreign Corporation 2.7 Rights

Answer 116

Rt to transact business Legal existence Access to philippone courts

Question 117

Foreign Corporation 3.7 Applicable Law

Answer 117

FC formed under laws other thanPhil W rt 2 transact bua in pHiL after License GR- No FC w/o License may Sue or Intervene in any action in PhiL

Question 118

Foreign Corporation 4.7 Effect of Doing business Without a License

Answer 118

Barred in any legal action but if a DC transacted w FC, DC is estopped and may be sued

Question 119

Foreign Corporation 5.7 Condition for the Issuance of a License

Answer 119

Application SPA for resident agent

Question 120

Foreign Corporation 6.7 Resident Agent

Answer 120

RESISENT Individual or domestic corp assigned to receive LEGAL docs

Question 121

Foreign Corporation 7.7 Purpose of Requiring Resident Agent Absence Bar FC to bring action in court

Answer 121

Legal Accountability Servuce of process

Question 122

Discuss Proxy

Answer 122

Section 57: Allows shareholders to vote in person or by proxy in all meetings of shareholders. Section 58: Provides the specific requirements for proxies, including that they must be in writing, signed, and submitted to the corporate secretary before the scheduled meeting. By enabling proxy voting, the Revised Corporation Code of the Philippines aims to ensure broader shareholder participation and representation in corporate decision-making processes.