Chapter 6 Flashcards
(True or False)
The inadequacy of both the sole proprietorship and partnership to raise the needed large amounts of capital resulted to the development of the corporate form of organization
True
The ownership interest of corporation are by ______
readily transferable shares of stocks
(True or False)
Shares of a corporation can’t be traded freely because it interrupts business operations of the corporation
False-can be traded freely without interrupting
A shareholder may sell his interest in the business, retire from the company, or die without causing any stoppage in the company’s business activities. Due to these attributes, a corporate form of business becomes an ______ type of business.
Enduring
(True or False)
Corporate form of business is not easily dissolved
True
What is Republic Act No. 11232 known as?
The Revised Corporation Code of the Philippines
It repealed the Batas Pambansa Bldg. 68, or “The Corporation Code of the Philippines”
Republic Act No. 11232
It is defined by the Section 2 of the New Code as 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.
Corporation
A corporation is a legal or juridical person with a personality separate from its individual members or shareholders who, as a natural persons, are merged in the corporate body.
Separate Legal Entity
A corporation is not in fact and in reality a person, however, the law treats it as though it is a person.
Separate legal entity
Under its corporate name, it may take or acquire properties, enter into contracts and sue or be sued.
Separate legal entity
The corporation cannot come into existence by mere agreement of the parties. It is created by existing legal principles
Created by operation of law
A corporation has the capacity of continuous existence irrespective of the death, withdrawal, insolvency or incapacity of the individual members or stockholders, and regardless of the transfer of their interest or shares of stock
Continuing lifespan or perpetual existence
A corporation, being a mere creation by law has only powers, attributes, and properties expressly authorized by law or incident to its existence.
Power, attributes, and properties authorized by law
If ever the corporation incurs losses and ultimately fails, shareholders may lose their investments. They will not be liable to pay for debts of the corporation beyond their investments.
Limited Liability
A shareholder or investor may sell his ownership shares without the consent of the other shareholders.
Transferability of ownership
(True or False)
The maximum loss that shareholders may incur will only be to the amount of their investments to the corporation
True
(True or False)
The corporation has a limited existence
False- has continuous existence
(True or False)
Owners of the corporation have unlimited liability
False-limited liability
(True or False)
In corporation, financing is easier to obtain
True
(True or False)
The shareholders are not the general agents of the business
True
Corporations that have capital stock divided into shares and are authorized to distribute to the holder of such shares dividends or allotments of the surplus profits on the basis of shares held.
Stock Corporations
Owners of stock corporation
Stockholders or shareholders
Private corporations which do not issue stocks. They are created not for profit but for public good and welfare.
Non-stock corporations
Owners of non-stock corporation
members
A corporation organized for religious purposes
Ecclesiastical corporation
A corporation organized for a purpose other than religion
Lay corporation
a corporation organized for business or profit
civil corporation
corporation organized for charitable purpose
Eleemosynary corporation
one which is organized under Philippine laws
Domestic Corporation
one formed, organized or existing under laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or State.
Foreign Corporation
a corporation whose issued stock of all classes are held by specified number of persons, not exceeding twenty.
Close corporation
a corporation which is open to any person who would like to be a shareholder or member thereto.
Open corporation
A corporation both exists in fact and in law.
De jure corporation
a corporation which exists in fact but not in law
De facto corporation
a corporation which is so related to another corporation that it has the power either, directly or indirectly to, elect the majority of the directors of such corporation.
Parent or holding corporation
a corporation which is so related to another corporation that the majority of the directors can be elected either directly or indirectly, by such corporation
Subsidiary corporation
a corporation formed or organized for the government of a portion of the state.
Public corporation
formed for some private purposes, benefit, aim or end.
Private corporation
Many corporations which are organized in one state or country extend their corporate business in other territories or countries. They have become ______
Multinational corporations
a corporation with a single stock holder
One Person Corporation
The term existence of the OPC is ____ but in case of a trust or estate, the term of existence is ______ with the existence of the trust or estate.
perpetual, co-terminous
Section 5 or the Revised Corporation Code of the Philippines, these are those who compose the corporation, whether as stockholders or shareholders in a stock corporation or as members in nonstock corporation
Corporators
The New Code states that they are those stockholders or members mentioned in the articles of incorporation as originally forminh and composing the corporation and who are signatories thereof
Incorporators
They are owners of the shares of stocks in a stock corporation either by subscription or by direct purchase or by transfer of stock from another shareholder.
Stockholders or shareholders
They are corporators of a non-stock corporation
members
Persons who bring about or cause to bring about the formation and organization of a corporation
Promoters
They undertake the steps towards the launching of a business enterprise
Promoters
Persons who agree to take and pay for original, unissued shares of a corporation
Subscribers
Usually investment bankers who have agreed, alone or with others, to buy at stated terms an entire or a substantial part of an issue of securities
Underwriters
(True or False)
The Revised Corporation Code of the Philippines provides that any person, partnership, association or corporation, singly or jointly with others but at least 15 in number , may organize a corporation for any lawful purpose or purposes
False- not more than 15 in number
(True or False)
Natural person who are licensed to practice a profession, and partnerships or associations organized for the purpose of practicing a profession shall not be allowed to organize as a corporation unless otherwise provided under special laws
True
(True or False)
Only a natural persons, trust or an estate may form an OPC
true
(True or False)
The corporation commences to have a juridical personality and legal existence from the time the Certificate of Incorporation is issued
True
Sec 22 of the New Codes states that the ______ or ____ shall exercise the corporate powers, conduct all business and control all properties of the corporation
Board of directors or trustees
The managing body of a stock corporation
Board of directors
Managing body of a nonstock corporation
Board of Trustees
The rules of actions adopted by the corporation for its internal government and for the government of its officers and of its stockholders or members
By-laws
(True or False)
OPC is required to submit by laws.
False-it is exempted
(True or False)
Under Section 38 of the Revised Corporation Code only the incorporators of a stock corporation shall enjoy pre-emptive right to subscribe to all issues or disposition of shares of any class.
False- all stock holders of a corporation shall enjoy pre-emptive right
The amount fixed in the articles of incorporation, to be subscribed and paid in or secured to be paid in by the shareholders of a corporation
Capital stock
Represents the total par or stated value of the shares to be issued
Authorized Capital Stock or Authorized Share Capital
The portion of the amount of the authorized share capital that has been subscribed but not fully paid
Subscribed Capital Stock or Subscribed Capital Share
The portion of the share capital which is issued and on the hands of the stockholders
Outstanding Capital Stock or Outstanding Share Capital
