CORPO

Question 1

NON-STOCK CORPORATIONS

Answer 1

SEC. 86. Definition. - For purposes of this Code
and subject to its provisions on dissolution, a nonstock
corporation is one where no part of its income is
distributable as dividends to its members, trustees, or
officers: Provided, That any profit which a nonstock
corporation may obtain incidental to its operations
shall, whenever necessary or proper, be used for the
furtherance of the purpose or purposes for which the
corporation was organized, subject to the provisions of
this Title.
The provisions governing stock corporations, when
pertinent, shall be applicable to nonstock corporations,
except as may be covered by specific provisions of this
Title.

Question 2

SEC. 87. Purposes. - Nonstock corporations

Answer 2

Nonstock corporations may be formed or organized for charitable, religious, educational, professional, cultural, fraternal, literary,
scientific, social, civic service, or similar purposes, like
trade, industry, agricultural and like chambers, or any
combination thereof, subject to the special provisions
of this Title governing particular classes of nonstock
corporations.

Question 3

Is membership in a non-stock corporation and rights arising therefrom transferable?

Answer 3

No, membership in a non-stock corporation and all rights arising therefrom are personal and nonstransferable, except the articles of incorporation or the bylaws otherwise provided.

Question 4

Does it mean that a non-stock corporation cannot have any income or profit?

Answer 4

No, it only means that the income or profit generated must be ploughed (When profits are “ploughed back” into a business, it means that instead of being taken out as dividends or earnings, they are reinvested into the company to help it grow. Think of it like planting seeds back into the soil to grow more plants for the next season instead of eating all the fruits right away.) back for the furtherance of the purpose or purposes for which the corporation was organized.

Question 5

in Non-stock corporation how many votes allowed?

(Membership; Right to vote)

Answer 5

The right of the members of any class or classes to vote may be limited, broadened, or denied to the extent specified in the articles of incorporation or the bylaws.

Shall be entitled to one vote

Question 6

What is the manner of voting of a nonstock corporation?

(Membership; Right to vote)

Answer 6

Manner of voting:
1. In person
2. Unless otherwise provided in the articles of incorporation or by the bylaws, by proxy
3. Remote communication and/or in absentia

Question 7

Non-stock corporation (Termination of membership)

Answer 7

Membership shall be terminated in the manner and for the causes provided in the articles of incorporation or the bylaws. Termination of membership shall extinguish all rights of a member in the corporation or in its property, unless otherwise provided in the articles of incorporation or the bylaws.

Question 8

How many number of trustees are there in a Nonstock corporation ?

Answer 8

The number of trustees shall be fixed in the articles of incorporation or bylaws which may or may not be more than fifteen(15).

Question 9

How long does a trustee shall hold office?

Answer 9

They shall hold office for not more than three years until their successors are elected and qualified. Trustees elected to fill vacancies occuring before the expiration of a particular term shall hold office only for the unexpired period.

Except with respect to independent trustee or non-stock corporations vested with public interest, only a member of the corporation shall be elected as trustee.

Unless otherwise provided in the articles of incorporation or the bylaws, the members may directly elect officers or a non-stock corporation

Question 10

Can an independent trustee or non-stock corporations vested with public interest be elected as trustee?

Answer 10

only a member of the corporation shall be elected as trustee.

Question 11

The list of its members and their proxies shall be updated for how many days prior to any scheduled election?

(List of Members and proxies;)

Answer 11

The list shall be updated to reflect the members and proxies of record twenty (20) days prior to any scheduled election

Question 12

Non-stock corporation (Place of meetings)

Answer 12

The bylaws may provide that the members of a non-stock corporation may hold their regular or special meetings at any place even outside the place where the principal office of the corporation is located.

Question 13

The Bylaws may provide that the members of a non-stock corporation may hold their regular or special meetings at any place even outside the place where the principal office of the corporation is located, provided:

Answer 13

1. Proper notice is sent to all members indicating the date, time and place of the meeting
2. The place of meeting shall be within Philippine territory.

Question 14

Definition of Close Corporations

Answer 14

SEC. 95. Definition and Applicability of Title. - A
close corporation, within the meaning of this Code, is
one whose articles of incorporation provides that:

(a) all the corporation’s issued stock of all classes, exclusive (not counting)
of treasury shares, shall be held of record by not more
than a specified number of persons, not exceeding
twenty (20);

(b) all the issued stock of all classes shall
be subject to one (1) or more specified restrictions on
transfer permitted by this Title; and

(c) the corporation shall not list in any stock exchange or make any public
offering of its stocks of any class. Notwithstanding the
foregoing, a corporation shall not be deemed a close
corporation when at least two-thirds (2/3) of its voting
stock or voting rights is owned or controlled by another
corporation which is not a close corporation within the
meaning of this Code.

Question 15

Any corporation may be incorporated as a close
corporation, except?

Answer 15

A. mining or oil companies
B. Stock exchanges
C.Banks
D. Insurance companies
E. Public utilities
F.Educational institutions
G. Corporations declared to be vested with public interest (Vested with public interest means that something is so important that it affects everyone in the community or society. For example, a public park is vested with public interest because everyone can use and enjoy it. It’s like saying this thing is valuable and important for the well-being of all people, not just a few.)

Question 16

Requisites. A stock corporation cannot be considered
a close corporation within the meaning of the RCCP if any of the
following requisites is absent in its Articles of Incorporation:

Answer 16

(1) All of the corporation’s issued stock of all classes,
exclusive of treasury shares; shall be held of record by not more
than a specified number of persons, not exceeding 20;

(2) All the issued stock of all classes shall be subject
to one or more specified restrictions on transfer permitted by
Title XII of the RCCP, particularly, a preemption of shares is
restricted in favor of any stockholder or of the corporation; and

(3) The listing of the corporate stocks in any stock
exchange or making a public offering of those stocks is
prohibited. 1

Question 17

When a Board Meeting is Unnecessary or Improperly held

Answer 17

• Still valid, if before after such action is taken, a written consent thereto is signed by all the directors
• Implied knowledge
• Directors are accustomed to take informal action
• None of the Directors makes a prompt objection in writing

An action should be ratified by a director who failed to attend until the director files his written objection

Question 18

Preemptive right of Close Corporation

Answer 18

The preemptive right of stockholders in close corporations shall extend to all stock to be issued, including reissuance of treasury notes, whether for money, property or personal services, or in payment of corporate debts, unless the articles of incorporation provide otherwise.

Preemtive right meaning: If the company wants to sell more shares, the people who already have shares get to buy the new ones first before anyone else can.

Question 19

Amendment of Articles of Incorporation Close Corporation

Answer 19

shall require the affirmative vote of** atleast 2/3 of the outstanding capital stock, whether with or without voting rights** or of such greater proportion of shares as may be specifically provided in the articles of incorporation for amending, deleting or removing any of the aforesaid provisions, at a meeting duly called for the purpose

Question 20

In case of deadlocks Close corporation

Answer 20

the SEC, upon written petition by any stockholder, shall have the power to arbitrate the dispute.
In the exercise of such power, the SEC shall have authority to make appropriate orders, such as:

1. Cancelling or altering any provision constained in the AOI, bylaws, or any stockholders agreement
2. Cancelling, altering or enjoining a resolution
3. directing or prohibiting
4. requiring the purchase
5. appointing a provisional director
6. dissolving corporation
7. granting such reliefs

Question 21

A Provisional Director

Answer 21

Shall be an impartial person who is neither a stockholder nor a creditor of the corporation or any of its subsidiaries or affiliates, and whose further qualifications, if any, may be determined by the SEC

Question 22

Powers of Provisional Director

Answer 22

A provisional director shall have all the rights and powers of a duly elected director, including the right to be notified of and to vote at meetings of directors until removed by order of the SEC or by all stockholders

Question 23

Withdrawal of stockholder (Close Corporations)

Answer 23

Any stockholder of a close corporation may, for any reason, compel the corporation to purchase shares held at fair value,

• which shall not be less than the par or issued value,
• when the corporation has sufficient assets in its books to cover its debts and liabilities exclusive of capital stock.

Question 24

Dissolution of Corporation ( Close Corporations)

Answer 24

Any stockholder of a close corporation may, by written petition to the SEC, compel the dissolution of such corporation whenever:
* Any acts of the directors, officers or those in control of the corporation are Illegal
* Fraudulent
* dishonest
* oppressive
* unfairly prejudicial to the corporation or any stockholder
* Corporate assets are being misapplied or wasted

Question 25

Board of Trustees of Educational Corporations?

Answer 25

The Trustees of educational institutions organized as non-stock corporations shall not be less than 5 nor more than fifteen; Provided (“on the condition that” or “with the stipulation that.” It is often used to specify that a certain condition must be met for something to happen or be true.) That the number of trustees shall be in multiples of five

Question 26

What is the term of office of the trustees of incorporated schools, colleges or other institutions of learning?

Answer 26

As soon as organized, so classify themselves that the term of office of one-fifth of their number shall expire every year.

• Trustees thereafter elected to fill vacancies, occuring before the expiration of a particular term, shall hold office only for the unexpired period.
• Trustees elected thereafter to fill vacancies caused by expiration of term shall hold office for five years.

The powers and authority of trustees shall be defined in the bylaws

For institutions organized as stock corporations, the number and term of directors shall be governed by the provisions on stock corporations.

Question 27

(Religious Corporations) Such corporations may be classified into:

Answer 27

Corporations sole and religous societies

Question 28

Corporation sole v religious societies

Answer 28

In contrast to a corporation sole, religous societies are formed by more than one person. Read section 14 RCCP

Question 29

Can a corporation sole be converted into a coporation aggregate by mere amendment of its articles of incorporation?

Answer 29

Yes, it is feasible. The corporate being remains distinct from its members, whatever their number.

The one member, with the concurrence of two-thirds of the membership of the organization for whom he acts as a trustee, can self-will the amendment. He can, with membership concurrence, increase the technical number of the members of the corporation from “sole” or one to the greater number authorized by its amended articles

Question 30

Where do you file the Articles of Incorporation of Religious Societies?

Answer 30

Under Section 114, this is filed with the SEC, verified by the affidavit of the presiding elder,secretary, or clerk or other member of such religious society or religous order, or diocese, synod, or distinct organization of the religous denomination, sect, or church, setting forth the following:

(a) That the religious society or religious order, or diocese, synod, or district organization is a religious organization of a religious denomination, sect or church;
(b) That at least two-thirds (2/3) of its membership has given written consent or has voted to incorporate, at a duly convened meeting of the body;
(c) That the incorporation of the religious society or religious order, or diocese, synod, or district organization is not forbidden by competent authority or by the Constitution, rules, regulations or discipline of the religious denomination, sect or church of which it forms part;
(d) That the religious society or religious order, or diocese, synod, or district organization desires to incorporate for the administration of its affairs, properties and estate;
(e) The place within the Philippines where the principal office of the corporation is to be established and located; and
(f) The names, nationalities, and residence addresses of the trustees, not less than five (5) nor more than fifteen (15), elected by the religious society or religious order, or the diocese, synod, or district organization to serve for the first year or such other period as may be prescribed by the

Question 31

What is One Person Corporation?

Answer 31

An One Person Corporation is a corporation with a single stockholder. Only a natural person, trust or an estate may form an OPC

Question 32

Why the creation of an One Person Corporations?

Answer 32

The real reason for allowing one person is to give him control, especially when his business is still in the early stages. The One Person Corporations is a good starting point to start a business.

Question 33

What is the term of existence of the OPC?

Answer 33

Shall be perpetual. However, in the case of the trust or estate, its term of existence shall be co-terminous with the existence of trust or estate.

Also, under the said Circular, a foreign national may put up an OPC, Subject to the applicable capital requirement and constitutional and statutory restrictions on foreign participation in certain investment areas or activities.

An OPC shall not be required to have a minimum authorized capital stock except as otherwise provided by special law

Question 34

Who are not allowed to form OPCs?

Answer 34

• Banks and quasi-banks
• preneed
• trust
• insurance
• public and publicly-listed companies, and
• non-chartered government-owned and controlled corporations may not incorparate as OPC. Neither may a natural person who is licensed to exercise a profession organize as an OPC for for the purpose of exercising such profession except as otherwise provided under special laws.

Question 35

Directors and Officers of OPC

Answer 35

The single stockholder shall be the sole director and president of the OPC

Within 15 days from the issuance of its certificate of incorporation, the OPC shall appoint a Treasurer, Corporate secretary, and other officers as may deem necessary, and notify the SEC thereof withing five days from appointment

Question 36

True or false; The single stocholder may not be appointed as the corporate secretary

Answer 36

True, but may assume the role of a stockholder/treasurer.

Question 37

The stockholder/treasurer shall give what? to the SEC in such a sum as may be required.

Answer 37

Bond

Question 38

The bond shall be renewed every how many years or as often as may be required?

Answer 38

two

Question 39

Special Functions of the Corporate Secretary (OPC)

Answer 39

• Maintaining the minutes of book
• Notify the nominee or alternate nominee of the death of incapacity of the single stockholder not later 5 days
• Notify the SEC of the death of the single stockholder within 5 days from such occurence
• call the nominee or alternate nominee and the known legal heirs