Consolidated Modules Flashcards

1
Q

What is a corporation?

A

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

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2
Q

What law governs corporations?

A

Corporation Code

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3
Q

What is the lifespan of a corporation?

A

50 years

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4
Q

Where must a corporation file its charter or articles of incorporation?

A

Securities and Exchange Commission (SEC)

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5
Q

What are the parties involved in the Articles of Incorporation?

A

State and Corporation, Stockholders and State, Stockholders and Corporation

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6
Q

What should be included in the Articles of Incorporation?

A

Name of corporation, Location of corporate headquarters, Names and addresses of incorporators, Purposes and nature of corporation, Authorized capital stock, Names and addresses of BOD, Rights of stockholders

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7
Q

What sets the framework of the corporation?

A

Articles of Incorporation

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8
Q

What is the actual picture of what really happens in a corporation?

A

By-laws

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9
Q

What is a de jure corporation?

A

Created in strict compliance with all the legal requirements and its right to exist as a corporation cannot be successfully attacked.

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10
Q

What is a de facto corporation?

A

Defectively created but there is an exercise of corporate rights and franchise resulting from an attempt in good faith to incorporate.

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11
Q

What is a closed corporation?

A

All the corporation’s issued stocks of all classes shall be held of record by not more than a specified number of persons, not exceeding 20. All of the issued stocks of all classes shall be subject to one or more specified restrictions on transfer permitted by the corporation code. Not listed on any stock exchange or make any public offering of any of its stock of any class.

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12
Q

What is a public/listed corporation?

A

Listed on an exchange, with assets in excess of Php 50,000,000, has at least 200 shareholders which are holding at least 100 shares of a class of its equity securities.

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13
Q

What is the doctrine of corporate entity?

A

The “separate and distinct personality” of a corporation from that of the stockholders.

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14
Q

What are the fundamental principles in corporation law arising from the doctrine of corporate entity?

A

Stockholders/members of a corporation are not the same as the corporation itself, the property belonging to a corporation cannot be attached nor held answerable for the debt of the stockholders, personal transactions, obligations, and liabilities of a stockholder should not in any way affect the operations of the corporation.

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15
Q

Under what conditions may the principle of separate identity of a corporation from its stockholders be disregarded?

A

Used to defeat public convenience, justify wrong, protect or cover fraud, defend crime or work an injustice.

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16
Q

What is the right of succession?

A

A corporation has a continuity of corporate life during its term of existence stated in the articles of incorporation.

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17
Q

What are ultra vires acts of a corporation?

A

Corporations under the Corporation Code possessing or exercising any corporate powers beyond the Code.

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18
Q

What are intra vires acts of a corporation?

A

Corporations under the Corporation Code possessing or exercising any corporate powers within the Code.

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19
Q

What is the doctrine of corporate opportunity?

A

When a director acquires for himself a business opportunity which should belong to the corporation, he must account for all such profits derived by him from the said business opportunity by refunding the profits to the corporation.

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20
Q

What is the trust fund doctrine?

A

The capital stock and assets of the corporation are held in trust for the creditors. Accordingly, there shall be no distribution of assets to shareholders until the claims of creditors have been paid.

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21
Q

What is par value?

A

Nominal value of a stock at the time of issuing; generally from P0.01 to P100.00; Considered as book keeping item only and bears no relationship to share’s book value or market value.

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22
Q

What is book value?

A

Tangible net asset value per share; represents the total amount a company is worth if all its assets are sold and all the liabilities are paid back.

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23
Q

What is market value?

A

The price at which someone is willing to pay for each share; current price of a stock quoted on the exchange.

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24
Q

What is authorized capital stock?

A

The maximum number of shares that the corporation may issue.

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25
Q

What is subscribed capital stock?

A

The number of shares that have been subscribed to.

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26
Q

What is paid-up capital stock?

A

The number of shares that have been paid for.

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27
Q

What is the minimum percentage of authorized capital stock that must be subscribed at the time of incorporation?

A

25%

28
Q

What is the minimum percentage of the total subscription that must be paid upon subscription?

A

25%

29
Q

What is the minimum paid-up capital required for incorporation?

A

P5,000.00

30
Q

What is outstanding capital stock?

A

Refers to the total shares of stock issued to subscribers or stockholders whether or not fully or partially paid.

31
Q

What is unissued capital stock?

A

Part of the capital stock which is not issued or subscribed.

32
Q

What is additional paid-in capital/paid-in surplus?

A

Amount paid in excess of par value.

33
Q

What is common stock?

A

The ordinary stock of a corporation which entitles the holder to a pro rata division of the dividends, without any preference or advantage over any other stockholders.

34
Q

What is preferred stock?

A

One which entitles the holder to certain preferences over other shareholders.

35
Q

What are the types of preferred shares?

A

Participating Preferred, Cumulative Preferred, Convertible Preferred, Callable Preferred (Redeemable Shares)

36
Q

What are redeemable shares?

A

Shares which may be purchased by the corporation from the holders of such shares upon the expiration of a fixed period.

37
Q

What are treasury shares?

A

Shares of stock which have been issued and fully paid for, but subsequently reacquired by the issuing corporation through purchase, redemption, donation or some other lawful means.

38
Q

What are the characteristics of treasury shares?

A

No voting rights as long as they remain in the treasury, not considered outstanding shares, not entitled to dividends, may again be disposed of for a reasonable price fixed by the board of directors.

39
Q

What is watered stock?

A

Stocks that are offered to the public far greater than their true value.

40
Q

What is pre-emptive right?

A

The first option to buy any additional shares that the company may offer.

41
Q

What are stock rights/rights offering?

A

The way how preemptive right is being applied in the market.

42
Q

What is parity price?

A

The price at which a convertible security (like preferred stock or bond) can be exchanged for common stock.

43
Q

What is a stock split?

A

A corporate action that increases the number of shares in a company. In effect, par/price is decreased per share.

44
Q

What is a reverse stock split?

A

When the stock price sinks too low, a reverse split combines more shares into a single share with a higher share price.

45
Q

What are the methods of voting?

A

Statutory Voting and Cumulative Voting

46
Q

What is statutory voting?

A

A stockholder may vote for every directorship, a maximum number of votes equal to the number of shares he owns.

47
Q

What is cumulative voting?

A

The stockholder may spread his total votes among the number of positions to be filled in any manner.

48
Q

What is appraisal right?

A

The right of a dissenting stockholder to demand payment of the fair value of his shares after dissenting from a proposed corporate action.

49
Q

When can appraisal right be exercised?

A

In case any amendment to the articles of incorporation, in case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets, in case of merger or consolidation.

50
Q

What is a merger?

A

A union whereby one or more existing corporations are absorbed by another corporation which survives and continues the combined business.

51
Q

What is a consolidation?

A

The union of two or more existing corporations to form a new corporation called the Consolidated Corporation.

52
Q

What are dividends?

A

When a corporation earns profit over and above the amount of its capital, the stockholders are entitled to have a share in such profit in proportion to their shareholdings.

53
Q

What are unrestricted retained earnings?

A

The accumulated profits realized out of normal and continuous operations of the business.

54
Q

What are retained earnings?

A

Refers to the percentage of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business or to pay debt.

55
Q

What are the types of dividends?

A

Cash Dividend, Stock Dividend, Property Dividend

56
Q

What is a cash dividend?

A

Paid to stockholders in cash.

57
Q

What is a stock dividend?

A

Stockholders are given additional shares of the same company.

58
Q

What is a property dividend?

A

Dividends are paid out in the form of assets. Assets can be shares of another corporation owned by the company.

59
Q

What are the dates involved in the declaration of dividends?

A

Declaration date, Ex-dividend date, Record date, Payment date

60
Q

What is the declaration date?

A

The date when the Board of Directors declared the dividend.

61
Q

What is the ex-dividend date?

A

Usually 2-3 business days prior to the record date.

62
Q

What is the record date?

A

Dividends are to be paid to shareholders of record as of a specified date.

63
Q

What is the payment date?

A

The date when the checks are mailed out.

64
Q

What is the Securities Regulation Code (R.A. 8799)?

A

The law governing the securities market in the Philippines.

65
Q

What does Section 8 of the Securities Regulation Code state?

A

Securities shall not be sold or offered for sale or distribution with the Philippines without a registration statement duly filed with and approved by the Commission. Prior to such sale, information of the securities, in such form and with such substance as the Commission may prescribe, shall be made available to each prospective purchaser.

66
Q

What are exempt transactions under Section 10 of the Securities Regulation Code?

A

The sale of securities to qualified buyers such as banks, registered investment houses, insurance companies, pension