BarQs Flashcards
What are the instances where the holders of nonvoting shares are entitled to vote?
a) amendment of AOI
b) Amendment or adoption of bylaws
c) sale, lease, exchange, mortgage, pledge and other disposition of all or substantially all properties of the corporation
d) incurring, creating or increasing bonded indebtedness
e)merger or consolidation of the corporation with another corporation or corporations
f) investing corporate funds to other corporations
g) dissolution of the corporation
h) increasing or decreasing the capital stocks subscribed and/or paid-up
what is a corporation?
a corporation is an artificial being created by operation of law having the right of succession and power, attirbutes and properties expressly authorized by law or incidental to its existence.
what is the difference between corporation and partnership?
As to
What is the control test?
The Aggregate Test (The Control Test) – requires looking into the nationality, domicile, or residence of the individuals who control the corporation.
Full beneficial ownership of the stocks, coupled with voting rights is essential.
what is the grandfather rule?
it is a stricter to more stringent test to determine compliance with minimum Filipino equity requirement. It determines the actual Filipino ownership and control in a corporation by tracing both the direct and indirect shareholdings in the corporation. this is employed only when there is doubt as to the nationality of the corporation and doubt usually arises in cases of company layering.
what are the similarities between corporation and partnership?
a. Both have juridical personality distinct from their components;
b. Both are groups of persons(generally);
c. There is distribution of profits in stock corporations and in partnerships;
d. They both act only through their agents; and
e. They are both registered with SEC.
what is a de facto corporation?
a corporation that is formed where there exist a flaw in its incorporation but there is colorable compliance with the requirements of law
distinguish par value share vs non-par value shares
Par value share is one with a specific money value fixed in the articles of incorporation and appearing in the certificate of stock.
The primary purpose thereof is to fix the minimum issue price of the shares thus, assuring creditors that the corporation would receive a minimum amount for its stock.
Requirement as to its issuance:
A par value share cannot be issued below par but can be issued more than par and the excess thereof shall form part of the paid-in capital but it is accounted for as a premium or as an additional paid-in capital.
NO PAR VALUE SHARE
It is one without any stated value appearing on the face of the certificate of stock. It is a stock which does not state how much money it represents. The shares without par value may not be issued for a consideration less than the value of Five pesos (P5.00) per share.
This is the minimum consideration for a non par value share
what is the doctrine of separate juridical identity?
Under the doctrine of separate legal entity, a corporation is considered to have a legal personality distinct and separate from its directors, individual stockholders or members (Bustos v. Millians Shoe, Inc., G.R. No. 185024, April 24, 2017).
GR: The assets and liabilities of the corporation are not owned by the stockholders even if they own the capital stock of the corporation and vice-versa. Hence, in cases of satisfaction of debt, a creditor of the corporation cannot claim the assets of its stockholders, and a creditor of a stockholder cannot claim the assets of the corporation.
what is the rule regarding non-use of corporate charter?
When a corporation fails to formally organize and commence business within five years from its incorporation, its certificate of incorporation shall be deemed revoked as of the day following the end of the five-year period.
If the corporation commenced its business but has become inoperative for at least five consecutive years, then the Commission after due notice and hearing shall declare the same as a delinquent corporation. Such delinquent corporation shall then have two years to resume its operation and to comply with the requirements of the Commission. The delinquenct status shall be lifted if its has complied within the two-year period, if it fails to do so then the certificate of incorporation shall be revoked.
distinguish sole proprietorship from corporation
as to capitalization,
what is the doctrine of piercing the veil of corporate fiction?
As a rule, a corporation has a personality sistinct from its stockholders and is not affected by the personal rights, obligations and transactions of the latter. However, the veil of corporate fiction is pierced when it is used as a shield to defeat public convenience, justify a wrong, protect or perpetuate fraud, defend a crime or confuse legitimate issues or perpetuate deception as an alter ego, adjunct or business conduit for the sole benefit of the stockholders.
what is a de facto corporation?
a corporation that is formed where there exists a flaw in its incorporation but there is colorable compliance with the requirements of law.
what are the requisites of a de facto corporation?
- a valid law which is the basis for its incorporation
- an attempt in good faith to incorporate
- assumption of corporate functions
what are the grounds for the disapproval of AOI or its amendments?
- when the AOI or its amendments does not conform with the form required
- when the purpose or purposes of the corporation is patently unconstitutional, illegal, immoral or contrary to government rules and regulations
- when the certification of the amount of capital stocks is false
- when the required percentage of Filipino ownership under the Constitution and other pertinent laws is not met
What is a corporation by estoppel?
SEC. 20. Corporation by Estoppel. – All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a result thereof: Provided, however, That when any such ostensible corporation is sued on any transaction entered by it as a corporation or on any tort committed by it as such, it shall not be allowed to use its lack of corporate personality as a defense. Anyone who assumes an obligation to an ostensible corporation as such cannot resist performance thereof on the ground that there was in fact no corporation.
Kukan INC vs KIC
In instances when the court pierced the veil of corporate fiction, the following factors concurred:
1. a first corporation is dissolved
2. the assets of the first corporation is transferred to a second corporation to avoid financial liability of the first corporation
3. both corporations are owned and controlled by the same persons such that the second corporation should be considered as a continuation and successor of the first corporation
