Classes of Corporation Flashcards
1
Q
A corporation created by special law for public purposes
A
Public Corporation
2
Q
What will govern public corporations?
A
Only special laws and charters will govern public corporations. Special Laws > General Law.
3
Q
What is the bare minimum for a corporation to be de facto?
A
Certificate of Registration. Even though the corporation does not file its by laws in the beginning of the operation, it is still deemed as a de facto Corporation. But today, under RCC, corporations are required to file by laws in the beginning
4
Q
a corporation created for profit.
A
Civil Corporation
5
Q
a corporation created for a purpose other than religion like secular or business purposes.
A
Lay Corporation
6
Q
a corporation created for charity.
A
Eleemosynary Corporation
7
Q
a corporation created for religious purposes.
A
Ecclesiastical Corporation
8
Q
What do you call a religious corporation with a single corporator?
A
Corporation Sole. Example, INC and The Crown
9
Q
What do you call a religious corporation governed by Board of Trustees
A
Corporation aggregate
10
Q
A corporation by fact and in law.
A
De Jure Corporation
11
Q
What do you call a corporation where they enter a contract and made a third person believe that they are a corporation?
A
Ostensible Corporation or Corporation by estoppel
12
Q
How will the persons in corporation by estoppel be liable?
A
Liable as general partners where their personal properties became also liable. They are jointly liable. In absence of provision of solidary couple, they are jointly liable
13
Q
corporation that controls another corporation
A
Parent Corporation
14
Q
What constitutes as a sister company?
A
Subsidiary Corporation
15
Q
How many percentage should be controlled by another corporation for a corporation to be considered as a subsidiary corporation?
A
More than 50% of the voting stock,
16
Q
What type of a controlled corporation if it’s only controlled by 50% or less. Controlled under the common control.
A
Affiliate Corporation
17
Q
a corporation being significantly influenced by an investor.
A
Associate Corporaiton
18
Q
Can a non-stock corporation issue stocks?
A
Yes they can provided that they will not distribute dividends. Example is golf and country clubs. They benefit in other ways
19
Q
What is a stock corporation?
A
Issue stocks, distribute dividends
20
Q
How to convert stock to non stock corporation?
A
Amend articles of incorporation or dissolve whichever they prefer.
21
Q
How to convert non stock to stock?
A
Dissolve corporation
22
Q
A corporation that was not formally organized but recognized by immemorial usage?
A
Roman Catholic Church
23
Q
A corporation with a single stockholder formed?
A
One Person Corporation
24
Q
Example, a there is 5 stockholders, all stocks are bought by one person. Is this considered as an OPC?
A
Simula pa lang nung ginawa ang corporation, dapat OPC na siya.
25
What does an OPC should have in its name?
OPC at the end or below the name. Similar with the other corporations where it has corp, or incorporated in its name.
26
How many percentage should a corporations vested with public interest in independent directors?
Minimum of 20%
27
What are the corporations vested in public interest?
1. Those whose securities are registered with SEC. Their securities are registered because they want to sell it publicly.
2. Those listed with an exchange
3. Assets are above 50 million, with having 200 or more shareholders where each shareholder has at least 100 shares
4. Financial Intermediaries.
28
As to availability of shares, a corporation whose shares are held by a select few individuals
Close Corporation. It should not exceed 20 persons
29
As to availability of shares, available for exchange in public market
Open Corporation
30
As to holders of shares, 50% of outstanding capital stock or 50% of the combined voting power of all stocks are owned by not more than 20 individuals
Closely held corporation
31
How do you defined publicly held corporation?
Anything that is not closely held corporation
32
A corporation formed organized exisitng in Philippine Laws
Domestic Corporation
33
Those created by agencies of the State for limited or specific purposes?
Quasi Public
34
Is Leyte Metropolitan Water Districts a private or public corporation?
Public Corporation for it is created by special law.
35
The test where the corporation is a national of the country under whose laws its organized or incorporated
Place of Incorporation Test.,
Under SEC and Revised Corporation Code
36
It refers to a test where the nationality of the corporation is determined by the nationality of its controlling stockholders
Control Test
37
It refers to a test where at least 60% of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines
FIA Test of Philippine National.
Sec 3 A and B of Foreign Investment Act. This is for purposes of foreign investment. Focuses on the trustee funds, pension funds
38
It refers to test wherein shares belonging to corporations at least 60% of the capital of which is owned by Filipino citizens shall be considered of Philippine nationality
DOJ-SEC Control Test. As long as 60%, you're good to go.
39
Control test where 60% of Filipino on both 1. Total number of outstanding shares of stock entitled to vote in the election of directors AND 2. total number of outstanding shares of stock whether or not entitled to vote in the election of directors
TREASURY SHARES NOT INCLUDED
SEC Control Test. Two criterias
40
It refers to a rule by which the percentage of FIlipino equity in target corporation engaged in nationalized is computed by attributing the nationality of second or even the subsequent tier ownership to determine the nationality of the corporate shareholder
Grandfather rule. It determines the actual Filipino ownership and control. Layering
Hinihimay niya lahat hanggang matira yung natural persons
41
It only applies when the 60-40 Filipino foreign ownership is in doubt or where there is reason to believe that there is non-compliance with the provisions of the Constitution on the nationality restriction
Grandfather Rule. Not always used. Only when in doubt
42
For nationality of non-stock corporation, what are the requirements
1. Should be SEC registered
2. All its members are citizens of the PH
OR
at least 60% of its members entitled to vote are Filipinos
OR
at least 60% of its memebrs' total number of votes as broadened in the by-laws
OR
all members of foreign non-stock corporation licensed to do business by the SEC are Filipinos
43
Is there a corporation that does not have a nationality?
Yes. Corporation Sole. Like Roman Catholic Church. In regards with acquiring land, will look in the nationality of its members in the Philippines. Even if it is headed by the Pope.
44
A corporation has a personality separate and distinct from its stockholders or members
Doctrine of Separate of Juridical Personality
45
The court will look at the corporation as an aggregation of persons undertaking business as a group, disregarding the separate juridical personality of the corporation in unifying the group to ascribe personal liability
Doctrine of Piercing the Corporate Veil
46
What kind of remedy does the doctrine of piercing the corporate veil apply?
It is an equitable remedy. It the last resort. Kasi nga may ginawa silang bad like fraud.
47
Who can do the piercing of the corporate veil?
Only the court can do that = Judge. It is a judicial power
48
Does the piercing of corporate veil apply to all transaction?
No. It applies only to the particular transaction. Doon sa naghabol lang.
49
What are the grounds for piercing?
1. Equity Piercing
2. Alter ego piercing/Instrumentality Test
3. Fraud Piercing
50
It is a ground for piercing where such personality is used to defeat public convenience, justify wrong, protect fraud or defend crime
Equity Piercing.
Ex. You want to travel around the world. You built a corporation to make utang. Then technically it is a debt of the corporation. But the debt was not used by the corporation but used by you for your personal reasons. So the bank can sue you and the corporation. Gets mo naman ba ha jasmin
51
What are the elements of determining applicability for piercing of corporate veil?
Control, Breach, Proximate Causation.
If any of these elements are absent, you cannot pierce the corporate veil
52
Who can avail the doctrine of the piercing veil?
The victim only
53
Can the corporation be held liable for torts committed by its officers for a corporate purpose?
Yes.
54
Can the corporation be held liable for crimes?
No. Corporations are incapable of intent hence they cannot commit felonies. Fines can still be imposed on them but violations on RCC are subject to dissolution
55
If the corporation is accused of tax evasion, who will be responsible?
The responsible officers who have the criminal liability
56
Can a corporation recover moral damages?
Generally no. Because in the first place they do not have nervous systems.
57
What are the exceptions for a corporation to recover moral damages?
If it arises from defamation, contractual breach attended by bad faith, or fraud.
58
A self constituted organizer who finds an enterprise and helps attract investors, forms a corporation and launches it in business all with a view to promotion profits
Promoter.
59
If a contract is done before incorporation, only during the time of the promoter, who is liable?
General Rule: Corporation is nto liable
XPN: Ratified by the corporation OR the corporation benefits from the contract
60
It refers to those who compose the corporation?
Corporators - Stockholders and Members
61
They formed the corporation
Incorporators
62
Is there a minimum number of incorporators?
No. Before there was minimum requirement of 5.
63
Can a corporation become incorporators?
Yes. Before, no.
64
The RCC eliminated the residency requirement for incorporators. T/F
Ture
65
Can a corporation practice a profession?
No. Only if allowed by a special law. Example, architecture.
66
What is the maximum number of incorporators?
15. The stockholders can actually join na in forming the corporation.
67
What are the qualifications of an incorporator?
1. Owner or subscriber of at least one share or a member
2. Must be of legal
3. If juridical entity, must be a partner (if partnership) or authorized signatory (if corporation)
68
There are no agents in corporation. Directors are just policy decision making body. T/F
True
69
Requirements for a Partnership to be an incorporator
Partnership's Affidavit
70
Requirements for a Domestic Corporation to be an incorporator
Investment must be approved by the majority of BOD
Ratified by stockholders representing at least 2/3
Director's or Trustees' or Secretary's Certificate
71
What should a foreigner must have while waiting for a TIN?
Passport
72
Can a representative of a juridical incorproator be named as director or trustee in the AOI?
GR: NO
XPN: If the representative is also an owner of at least one share of stock of the corporation being formed.
73
The amount fixed on the AOI to be subscribed and paid by the stockholders.
Authorized Capital Stock
74
It is the maximum number of shares that the corporation is legally allowed to issue without amending the articles of incorporation
Authorized Capital Stock. This is not reserved for creditors because they are not all sold
75
It is the same amount that can be loosely termed as the trust fund of the corporation
Capital Subscribed. The creditors can go after the subscriber. This is the legal capital
76
Formed as part of the trust fund but not entirely
Paid-Up Capital. This refers to amount paid only. You subscribed for 100,00 shares but paid only 10,000. The paid-up capital is 10,000
77
The portion of the ACS which is covered by subscription agreements whether fully paid or not
Subscribed Capital Stock. You are a stockholder once you subscribe.
78
If you buy shares to an existing stockholder, are you automatically a shareholder?
No. You are not a shareholder until your name is actually registered in the stock and transfer book.
In issuance kasi, una pa lang nandun ka na.
79
The total shares of stock issued under binding subscription contracts to subscribers or stockholders whether fully or partially paid, except treasury shares
Outstanding Capital Stock = Issued - Treasury Shares
80
What is the minimum subscription requirement?
None. Unless required by Special Laws
81
After incorporation, in case of increase capital stock, what is the required minimum subscription requirement?
at least 25% of the increase in capital stock must be subscribed and at least 25% of the amount subscribed must be paid in cash or in property
82
Is partial payment of subscription allowed?
Yes. Except on those with no par value shares, they are deemed fully paid and non-assessable
83
This is the document prepared by the incorporators containing the matters required by the RCC and filed with SEC.
Articles of Incorporation
84
What contractual relationships do an AOI defines?
The State and the corporation.
the State and the stockholder,
the corporation and the stockholders
85
Can the business or trade name differentt from corporate name?
Yes. They can have more than one business or trade name.
86
Can the Personal Names may be used?
Yes but subject to conditions
87
May the AOI provide more than one purpose.
Yes provided that it's not contrary to law and there is only one primary purpose. Why?? Because the shareholders have the right to expect that the funds and assets are used in that primary purpose.
88
So, investment of funds for primary purpose, what is the voting requirement?
Only boards approval
89
What if investment of funds for purposes other than primary?
Approval of at least majority of the entire board and SH representing 2/3 of the outstanding capital shareholders
90
What is the basis of principal office of the corporation?
The place stated in its AOI. It is not the place of its actual operation.
91
What must be included in the address in AOI?
It must be specific as possible. With unit number etc.
92
What is the corporate term?
Perpetual unless AOI provides otherwise.
93
What is the period to extend if the AOI provides that they will not be perpetual?
Three years prior to expiration
94
How long can condominium corporation last?
Condominium corporations last as long as the condominium building.
95
What if the corporation was incorporated prior to the effectivity of the RCC?
They will exist perpetually.
96
What is the effectivity date of the Revised Corporation Code?
February 23, 2019
97
What is the voting requirement for amendment of articles of incorporation?
Majority of BOD. 2/3 of outstanding capital shareholders
98
When is the effectivity of amendment of AOI?
Upon approval of SEC or after 6 months of SEC's inaction
99
What are the amendments which requires the meeting of SH or memebers for approval?
Extension or shorten of corporate term
Increase/decrease capital stock
Merger or Consolidation
Amendment
Voluntary Dissolution where no creditors are affected
Voluntary Dissolution where creditors are affected
100
Is appraisal right always available?
No. If change lang ng name, no appraial right. You can't demand the payment of the fair value of your shares just because you disagree on the proposed amendment.
If the effect is substantial, this is the only way the appraisal right will be used.
101
Are all matters in the AOI be amended?
No. This is matters of accomplished fact such as names and address of the incorporations, date and place of incorporation
102
What if they want to change their name into married name in the articles of incorporation?
They cannot. They can just changed the certificate in the shares.
103
What is the basis of corporate existence? Kailan ang birthday?
The date stated in the certificate of incorporation not when the SEC receives the application.
This is the Commencement of of Corporate Existence
104
What is the relatively permanent and continuing rules of action adopted by the corproation
By-laws
105
When is the by-laws effective?
It is only effective upon issuance of SEC of a certification that it is not inconsistent with the RCC.
So kapag may nakaligtaan si SEC, di ka pa rin ligtas.
106
What is the binding effect of bylaws to third persons?
Not binding unless they have knowledge to it.
107
How is the original by-laws be adopted?
It may accompany the articles of incorporation. If it is, it must be signed and approved of all incorporators. Incorporators ha hindi stockholders, hindi directors.
108
What is the voting requirement if the bylaws are filed after the issuance of Certificate of Incorporation?
Approval of majority of stockholders.
109
Who can amend the by-laws?
It can be stockholders together with the board. Majority of board plus majority of OCS
110
Can the board only ammedn the by-laws?
Yes, if it delegated by them by the 2/3 OCS. This can still be revoked by the majority vote of OCS.
Mas mahirap ibigay madalig bawiin
111
What are the powers of corporation?
Express, Implied, Incidental
Express - nasa AOI
Implied - implication lang, inferred lang
Incidental - hindi express di implied, nagkataon lang.
112
What is the theory of general capacity.?
A corproation is said to hold such powers that are not contrary to general law.
113
Can a corporation donate?
Based on the old code, no. But in RCC, yes. Only the foreign corporations cannot
114
What is the theory of specific capacity?
A corporation can only have powers have powers that are specifically given to them.
115
Those committed outside the object for which a corporation is created
Ultra Vires
116
What is the difference between ultra vires and illegal acts?
Ultra Vires are voidable and can be ratified
117
What are the types of ultra vires acts?
first type - outside express, implied and incidental powers.
ex. line of business mo food then nagbenta ka ng alahas.
2nd type - corporated agents without authority
within the rights of the corporation but done by those who do not have authority
3rd type - contrary to laws or public policy - this cannot be ratified
118
What are the effects of Ultra Vires in executed cotnracts?
Cannot be set aside na
119
What is the effect of ultra vires in executory contracts?
They cannot be enforced.
120
What is the effect of ultra vires if partly executed and partly executory?
Apply principle of unjust enrichment
