Corporation

Question 1

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

Answer 1

Corporation

Question 2

To organize a corporation that could claim a juridical personality of its own and transact business as such, is not a matter of absolute right but a privelege which may be enjoyed only under such terms as State may deem necessary to impose.

Answer 2

Theory of Concession

Question 3

Corporations are composed of natural persons and the legal fiction of a separate corporate personality is not a shield for the commission of injustice and inequity.

Answer 3

Theory of Enterprise Entity

Question 4

A corporation in which capital stock is divided into shares and is authorized to distribute to holders of such shares, dividends or allotments of the surplus profits on the basis of the shares held.

Answer 4

Stock Corporation

Question 5

Does not issue stocks and no part of its income is distributed as dividends to its members, trustees and officers.

Answer 5

Non-stock Corporation

Question 6

Organized in accordance with the requirements of law.

Answer 6

De Jure Corporation

Question 7

A corporation where there exists a flaw in its incorporation. Its existence cannot be inquired collaterally.

Answer 7

De Facto Corporation

Such inquiry may be made by the Solicitor General in quo warranto proceeding.

Question 8

Groups of persons which holds itself out as a corporation and enters into a contract with a 3rd person on the strenght of such appearance. It cannot be permitted to deny its existence in an action under said contract.

Answer 8

Corporation by Estoppel

Question 9

body that though not lawfully organized as a corporation, has been duly recognized by immemorial usage as a corporation, with rights and duties maintainable at law.

Answer 9

Corporation by Prescription

Question 10

It is one which controls another as a subsidiary by the power to elect management. It is one which holds stocks in other companies for purposes of control rather than for mere investment. It has a passive portfolio merely holding securities for control and management.

Answer 10

Holding Corporation

Question 11

It is one which holds stocks in other companies for purposes of investment rather than control. It has an active investment policy which has an active portfolio buying and selling securities.

Answer 11

Investment Company

Question 12

Separate entities with power to contract with each other. The board of directors of the parent company determines its representatives to attend and vote in the stockholder’s meeting of its subsidiary. The stockholders of the parent company demand representation in the board meetings of its subsidiary. The BOD of the parent or holding company has the prerogative to choose its nominees in the board of directors or its subsidiary.

Answer 12

Parent and subsidiary corporation

Question 13

Company which is subject to common control of a mother holding company and operated as part of the system.

Answer 13

Affiliates

Question 14

Special form of corporation, usually associated with the clergy and consists of one person only and his successors, who are incorporated by law to give some legal capacities and advantages.

Answer 14

Corporation sole

Question 15

Non-stock corporation governed by a board but with religious purposes.

Answer 15

Religious societies

corporation aggregate

Question 16

Created for charitable purposes.

Answer 16

Eleemosynary Corporation

Question 17

Organized for profit.

Answer 17

Civil Corporation

Question 18

Private corporations which have accepted from the State the grant of a franchise or contract involving the performance of public duties (public service corporations).

Answer 18

Quasi- Public Corporation

Question 19

Though not vested with the general powers of corporations, are organized by statutes or immemorial usage, as a persons or aggregate corporations with precise duties which may be enforced, and privileges which may be maintained, by suits of law.

Answer 19

Quasi- Corporation

Question 20

Registered in one country but doing business elsewhere.

Answer 20

Tramp- Corporation

Question 21

If the directors or stockholders are so divided on the management of the corporation’s business and affairs that the votes required for a corporate action cannot be obtained, with the consequence that the business and affairs that the votes required for that the business of the corporation can no longer be conducted to the advantage of the stockholders generally, the SEC, upon written petition by any stockholder, shall have the power to atribute the dispute.

Answer 21

Deadlocks

Question 22

1. 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.
2. Is not a receiver of the corporation and does not have the title and powers of a custodian or receiver.
3. 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 the stockholders.
4. The compensation of the provisional director shall be determined by the agreement between such provisional director and the corporation.

Answer 22

Provisional Director

Question 23

Corporation formed, organized or existing under Philippine laws.

Answer 23

Domestic Corporation

Question 24

A corporation formed, organized or existing under any laws other than those of the Philippines and whose laws allow Filipino citizens and corporation to do business in its own country or state.

Answer 24

Foreign Corporation

Question 25

A foreign corporation may engage and transact business in another country with the express consent of such country or sovereignty.

Answer 25

Consent Doctrine

Question 26

Implies a community of commercial dealings and arrangements, and contemplates to some extent the performance of acts or works or the exercise of some functions normally incident to and in progressive prosecution of, the purpose and object of its organization. | Continuity Test

Answer 26

Doing Business

Question 27

Foreign corporation can sue or be sued on a transaction or series of transaction set apart from the common business of a foreign enterprise in the sense that there is no intention to engage in a progressive pursuit of the purpose and object of business transaction.

Answer 27

Doctrine of Isolated Transaction

Question 28

Branch officies that can do business and earn income in the Philippines but it cannot angage in any activities where the Philippine Constitution and laws impose restrictions as to foreign equity ownership.

Answer 28

Fully Foreign-Owned Branch Office

Question 29

Cannot engage in any commercial activities nor earn any revenue but can provide customer service, conduct market research, and promote the company's products.

Answer 29

Representative Office

Question 30

The stricter the test applies when there is "doubt" over the 60-40 Filipino-foreign equity ownership. This rule states that if the percentage of Filipino ownership in the corporation is less than 60%, only the number og shares corresponding to this percentage shall be declared as Filipino.

Answer 30

The Grandfather Rule | SEC Rules of 1967

Question 31

Corporations with a single stockholder.

Answer 31

One Person Corporation

Question 32

Contains all actions, decisions, and resolutions taken by the corporation.

Answer 32

Minute Book

Question 33

A corporation has a personality separate and distinct from that of its stockholders or members.

Answer 33

Doctrine of Separate Personality

Question 34

Allows the state to disregard for certian justifiable reasons the fiction of juridical personality for the corporation, separate and distint from the persons composing it.

Answer 34

Piercing Doctrine of the Veil of Corporate Fiction

Question 35

When a corporation is used as a cloak to cover fraud, or to do wrong.

Answer 35

Fraud Cases

Question 36

1. When the corporate entity is merely a farce since the corporation is an alter ego, business conduit or insturmentality or a person or another corporation. 2. Where one corporation is so organized and controlled and its affairs are conducted so that it is in fact, a mere instrumentality or adjunct of the other, the fiction of the corporate entity of the "instrumentality" may be disregarded. | Instrumentality Rule/Business Conduit

Answer 36

Alter Ego-Cases

Question 37

When piercing the corporate fiction is necessary to achieve justice or equity.

Answer 37

Equity Cases

Question 38

Those mentioned in the articles of incorporation as originally forming and composing the corporation, having signed the articles and acknowledged the same before a notary public.

Answer 38

Incorporators

Question 39

A person who has agreed to take stock from the corporation on the original issue of such stock.

Answer 39

Subscriber

Question 40

A person who promises to subscribe and take the stocks in the event the stocks will be offered to the public and will not be subscribed.

Answer 40

Underwriter

Question 41

The instrument granting the right and privelege to the corporation to be and act as such.

Answer 41

Charter

Question 42

The privelege itself to act as a corporation

Answer 42

Franchise

Question 43

The franchise to exist as a corporation.

Answer 43

Primary Franchise

Question 44

Right or privilege conferred upon existing corporation, such as to use the streets of a municiplaty to lay pipes or tracks, or operate a messenger and express delivery service.

Answer 44

Secondary Franchise

Question 45

Shareholders, being entitled to that number of votes that his number of shares multiplied by the number of directors to be elected will bring, may give all said votes to one candidate or he may distribute them among as many candidates as he sees fit.

Answer 45

Cumulative Voting

Question 46

Is a person who, apart from shareholdings and fees received from the corporation, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to materially interfere with the exercise of independent judgement in carrying out the responsibilities as a director.

Answer 46

Independent Director

Question 47

If there is presented to a corporate officer or director a business opportunity which corporation is financially able to undertake; from its nature, is in line with corporations business and is of practical advantage to it; and one in which the corporation has an interest or a reasonable expectancy.

Answer 47

Doctrine of Corporate Opportunity

Question 48

When the vacancy prevents the remaining directors from constituting a quorom and emergency action is required to prevent grave, substantial, and irreparable loss or damage to the corporation, the vacancy may be temporarily filled from among the officers of the corporation by unanimous vote of the remaining directors or trustees.

Answer 48

Emergency Board

Question 49

Granted by law, Corporation Code and its Articles of Incorporation or Charter. | powers of a corporation

Answer 49

Express

Question 50

Expressly stated but are deemed to be within the capacity of corporate entities. | powers of a corporation

Answer 50

Inherent/ Incidental

Question 51

Exists as a necessary consequence of the exercise of the express powers of the corporation or the pursuit of its purposes as provided for in the AOI. | powers of a corporation

Answer 51

Implied/Necessary

Question 52

An act which is not within the express, implied, and incidental powers of a corporation.

Answer 52

Ultra Vires Act

Question 53

Any contract for the acquisition of unissued stock in an existing corporation or a corporation still to be formed.

Answer 53

Subscription Contract

Question 54

The subscribed capital stock of the corporation is a trust fund for the payment of debts of the corporation which the creditors have the right to look up to satisfy thier credits. Corporation may not dissipate this and the creditors may sue stockholders directly for the unpaid subscription.

Answer 54

Trust Fund Doctrine

Question 55

Declaration officially made by the corporation usually in the form of a resolution of the BOD requiring payment of unpaid subscription.

Answer 55

Call

Question 56

Stock which was not paid within 30 days from the date fixed in the contract of subscription or from the date stated in the call made by the BOD.

Answer 56

Delinquent Stock

Question 57

The amount fixed in the Articles of Incorporation to be subscribed and paid by the stockholders of the corporation.

Answer 57

Authorized Capital Stock or Capital Stock or Legal Stock or Stated Capital

Question 58

Interest or right which owner has in the management of the corporation, and its surplus profits, and, on dissolution, in all of its assets remaining after the payment of its debt.

Answer 58

Shares of Stock

Question 59

Written acknowledgement by the corporation of the stockholder's interest or right in the corporation and its property.

Answer 59

Certificate of Stock

Question 60

The portion of the authorized capital stock which has been subscribed and actually paid.

Answer 60

Paid-up Capital

Question 61

The portion of the authorized capital stock that is covered by subscription agreements whether fully paid or not.

Answer 61

Subscribed Capital

Question 62

The total shares of stock issued to subscribers or stockholders, whether or not fully or partially paid except treasury shares so long as there is a binding subscription agreement.

Answer 62

Outstanding Capital Stock

Question 63

Properties and assets of the corporation that are used for its business or operation.

Answer 63

Capital

Question 64

Excess of current assets over current liabilities.

Answer 64

Working Capital

Question 65

Refers to the total amount of current assets.

Answer 65

Circulating Capital

Question 66

Unrestricted retained earnings set apart from the general mass of funds of the corporation and distributed among the shareholders in proportion to their shares or interest in the corporation, in the form of case, property or stocks.

Answer 66

Dividends

Question 67

Issued with par value and preference may be to assets after dissolution and/or distribution of dividends and other preferences.

Answer 67

Preferred Shares

Question 68

Are those which permit the issuing corporation to redeem or purchase its own shares.

Answer 68

Redeemable Shares

Question 69

Shares which have been earlier issued as fully paid and have thereafter been acquired by the corporation by purchase, donation, redemption or through some lawful means.

Answer 69

Treasury Shares

Question 70

May be given certain rights and privileges not enjoyed by the owners of other stocks. Where the exclusive right to vote and be voted for in the election of directors is granted, it must be for a limited period not to exceed 5 years from the date of incorportaion: Provided, that such exclusive right shall not be allowed if its exercise will violate the "Anti-Dummy Law" (CA 108); and the "Foreign Investments Act of 1991" (RA 7042).

Answer 70

Founder's Share

Question 71

Is the basic class of stock ordinarily and usually issued without extraordinary rights and privileges and the owners thereof are entitled to a pro rata share in the profits of the corporation and in its assets upon dissolution and likewise in the management of its affairs without preference or advantage whatsoever.

Answer 71

Common Share

Question 72

Shares issued to promoters of a corporation who helped in the formal organization of the corporation.

Answer 72

Promoter's Shares/ Promotion Stock

Question 73

Desposited with 3rd person to be delivered to stockholder or his assign after complying with certain conditions, usually payment of full subscription price.

Answer 73

Escrow Stock

Question 74

Are those issued in excess of the authorized capital stock.

Answer 74

Over-issued Stock

Question 75

Issued as fully paid when in fact it is not "water" in the stock- represents the difference between the fair market value at the time of the issuance of the stock and the par or issued value of said stock.

Answer 75

Watered Stock

Question 76

Value stated and fixed in the AOI | also called Nominal Value

Answer 76

Par Value Shares

Question 77

Shares having no par value but have issued value stated in the AOI or to be fixed by the BOD.

Answer 77

No Par Value Shares

Question 78

Right to subscribe to all issues or dispositions of shares of any class in proportion to his present stockholdings, the purpose being to enable the shareholder to retain his proportionate control in the corporation and to retain his equity in surplus.

Answer 78

Pre-emptive Right

Question 79

Right to withdraw from the corporation and demand payment of the fair market value of his shares after dissenting from certain corporate acts involving fundamental changes in corporate structure.

Answer 79

Appraisal Right

Question 80

Suit brought by stockholders for and in behalf of the corporation and against an person, who could be another stockholder, director, officer or/and 3rd person.

Answer 80

Derivative Suit

Question 81

Corporate Combinations

Answer 81

Amalgamation

Question 82

One corporation absorbs the other and remains in existence while the other is dissolved

Answer 82

Merger

Question 83

A new corporation is created, and consolidating corporations are extinguished.

Answer 83

Consolidation

Question 84

The extinguishment of a corporation's franchise and the termination of its corporate existence or business purpose.

Answer 84

Dissolution

Question 85

Refers to any person who provides truthful information relating to the commission or possible commission of any offense or violation under RRC.

Answer 85

Whistleblower

Question 86

Proof of one's ownership or indebtedness in a company. Short-term - treasury bills and commercial papers. Long-term - stocks and bonds.

Answer 86

Securities

Question 87

The system of stewardship and control to guide organizations in fulfilling their long-term economic, moral, legal and social obligations towards their shareholders/members and other stakeholders.

Answer 87

Coporate Governance

Question 88

A process, effected by an entity's BOD, managament and other personnel, applied in strategy setting and across the enterprise that is designed to identify potential events that may affect the entity, manage risk appetite, and provide reasonable assurance regarding the acheivement of entity objectives.

Answer 88

Enterprise Risk Management

Question 89

A director who has executive responsibility of day-to-day operations of a part or the whole of the corporation.

Answer 89

Executive Director

Question 90

A person who is independent of managament and the controlling shareholder, and is free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgement in carrying out his responsibilities as a director.

Answer 90

Independent Diretor

Question 91

A process designed and effected by the entity's BOD/ Trustees, Senior Management, and all levels of personnel to provide reasonable assurance on the achievement of objectives through efficient and effective operations; reliable, complete and timeley financial and management of corporate information; and compliance with applicable laws, regualtions, and the organization's policies and procedures.

Answer 91

Internal Control

Question 92

A group of executives given the authority by the BOD/ Board of Trustees to implement the policies it has laid down in the conduct of the business of the corporation.

Answer 92

Managament

Question 93

A director who has no executive responsibility and does not perform any work related to the day-to-day operations of the corporation.

Answer 93

Non-executive Director

Question 94

An interest, participation or privilege over a specific property of a corporation that allows the holder to use such property under certain terms and conditions. The holder however, shall not be entitled to dividends from the corporation or to its assets upon its liquidation.

Answer 94

Non-proprietary Right

Question 95

An interest, participation or privilege in a corporation which gives the holder the right to use the facilities and to receive dividends or earnings from the corporation. Upon the liquidation of the corporation, the holder shall have proportionate ownership rights over its assets.

Answer 95

Proprietary Right

Question 96

A company with assets of at least Php 50,000,000 and having 200 or more shareholders holding at least 100 shares each of equity securities.

Answer 96

Public Company

Question 97

A company that: 1. Issues proprietary and/or non-proprietary shares/certificates 2. Issues equity securities to the public that are not listed in an Exchange 3. Issues debt securities to the public that are required to be registered to the SEC, whether or not listed in an exchange.

Answer 97

Registered Issuer