Corporation Law Flashcards
Can a corporation be held criminally liable?
No, but may be held liable for fines; it will be the corporate officers who approved.
Can a corporation be entitled to moral damages?
No except when a corporation has a reputation that is the best resulting in its humiliation in the business Realm
Can a corporation be entitled to constitutional right against self-incrimination?
NO
It means that the corporation has a personality separate and distinct from the stockholders and Affiliated companies
doctrine of separate personality Or corporate entity theory
It means that the stockholders reliable only up to the extent of their Capital contribution what it comes to corporations liabilities
Limited liability rule
It means that the assets of the corporations are considered trust fund reserved for payment of liabilities to creditors of the corporation
Trust fund Doctrine
These are exemptions to the doctrine of separate personality (i.e. Piercing the veil of the corporate entity)
FADE
1. Fraud cases
- Alter Ego cases
- Defeat public convenience cases - tax evasion or defend a crime
- Equity cases - labor cases
True or false
only public corporations may be created by special law while private corporations must be created by operation of General Corporation law
true
it means that a corporation owes its existence to the law and the state and the extent of its existence, powers and Liberties is fixed by its charter. thus, it only possesses properties attributes rights and Powers provided by law or incident to its existence
Concession Theory
It best describes the strong juridical personality of the corporation
right of succession
True or false. A corporation shall have Perpetual existence a list of Corporation upon vote of its stockholders representing 2/3 dissent the change.
False. Majority.
No extension may be made earlier than ____ years prior to the original or subsequent expiry date unless there are justifiable reasons for an earlier extension as may be that their men by though sec. Such extension shall take effect only on the day following the original or subsequent expiry date.
3
Types of corporate powers
- Express
- Implied
- Incidental or inherent
These are acts committed outside the object for which a corporation is created as defined by the law of its organization and therefore beyond the express employed an incidental powers of the corporation
Ultra Vires acts
Ultra vires acts which are null and void
illegal Acts
What is the status of ultra vires acts for failure to comply with voting formality required by law
null and void but the Declaration of nullity may be barred by estoppel
What is the status of ultra vires Acts which are outside the primary and secondary purposes of the corporation
voidable on the part of the other party
What is the status of Ultra vires acts which are unauthorized or when the corporate officers exceed their Authority
unenforceable but they may become enforceable on the basis of
- Express or implied ratification by the corporation
- Doctrine of estoppel
- Doctrine of apparent authority of the corporate officers
It is a corporation created by special law for public purpose
Public corporation
- Municipal Corporation
- Gocc
Is it private Corporation owned by private individuals but performing an essential governmental function
quasi-public Corporation or public utility
It is a corporation created for the immediate benefit of the members composing it
private Corporation
It is a corporation created for a purpose other than religion
lay Corporation
It is a corporation created for charity
It is a corporation created for charity of its members
eleemosynary Corporation
Civil corporation
It is a corporation created for religious purposes
ecclesiastical or religious Corporation
It is a religious Corporation with a single corporator. An example is the Catholic Church
Corporation sole
It is a religious Corporation governed by a Board of Trustees
Corporation aggregate for religious Society
It is a corporation where by its juridical personality is subject to direct attack by the state through a special civil action of quo warranto proceedings
de facto Corporation
It is a corporation which is not actually a corporation since it does not have a charter
ostensible Corporation or Corporation by estoppel
Persons pretending to be a corporation will be liable as ______________ for the contracts they have entered into
a. Limited partners
b. stockholders
c. General partners
c
It means that the nationality of the corporation is determined by its place open Corporation or the law that created such Corporation
doctrine of Incorporation
This Corporation must appoint a resident agent in the Philippines before it may be given a license by SEC to engage in business in the Philippines
foreign corporation
When can a foreign corporation sue before the Philippine courts
when it does business in the Philippines with license
or when without licenses, infringement or the defendant
It is a corporation which is a member of group of companies
affiliate
How its a nonstock corporations converted to a stock Corporation
by dissolving the non-stock Corporation and forming a new stock Corporation
How is a stock Corporation converted into a Non-Stock Corporation
a. By mere Amendment Articles of Incorporation
b. Dissolving the stock Corporation and forming a new non stock Corporation
Can redeemable preference shares be redeemed by the issuing corporation at the period stated despite the absence of unrestricted retained earnings?
yes, provided that the total assets of the corporation or still higher than its total liabilities after payment to redeemable preferred stockholders
What is violated when a corporation subsequently reacquired shares when there is no unrestricted retained earnings?
Trust fund doctrine
What are the corporate acts when non-voting preferred shares may still vote (I3 AM SAD)
- Incurring, creating or increasing bonded indebtedness
- Investment of corporate funds in another corporation or another business for pros
- Increase or decrease of capital stock
- Amendment of articles of incorporation including changing the corporate term
- Merger or consolidation of corporations
- Sale or disposition or pledge or mortgage of all or substantially all of corporate property
- Adoption and amendment of bylaws
- Dissolution, rehabilitation or liquidation of the corporation
Corporate acts when non-voting preferred shares or not allowed to vote (CRRADE)
CoRemRatManDivEl
- Granting of compensation of directors
- Removal of directors
- Ratification of disloyalty of directors or voidable contract involving self-dealing director or interlocking director
- Approval of management contract
- Distribution of stock dividends
- Election of directors
What is the minimum issue price of par value shares
par value, except treasury shares which may be issued below par as long as the price is reasonable
It is the total value of shares issued and subscribed excluding the share premium and in excess of par
legal capital in case of par value shares
What is the minimum stated value of no-par value shares
none, as long as the minimum issue price is 5 pesos
What is the minimum issue price of no-par value shares
5 pesos
It is the total consideration received including the share premium in case of no par value shares
legal capital
It is the total consideration received including the share premium in case of no par value shares
legal capital
These corporations cannot issue no-par value shares
banks, trust and insurance companies, other corporations authorized to obtain or access money from the public whether publicly listed or not
The special privilege given to the founders of the corporation such as the exclusive right to be elected in the board of directors shall not exceed _________ years.
Five
These are shares upon which the issuance is subject to a suspensive condition
escrow shares
Watered shares are those shares issued for a price even below par resulting to ___________ of capital, ____________ of assets, ____________ of liabilities. It violates trust fund doctrine. Overstatement or understatement?
Overstatement, overstatement, understatement
Qualifications of incorporators of proposed private corporation
- Natural or juridical persons
- Legal age
- Owner or subscriber of at least one share or member
- Required minimum ownership of filipino or maximum ownership of foreigners
What is the nationality requirement reserved for filipinos in mass media
100%
What is the nationality of requirement reserved for filipinos in advertising
70%
What is the nationality requirement preserved for filipinos in public utility
60%
Which certain industries reserve 60% ownership for filipinos PENOl
- Public utility
- Educational institution
- Exploration of natural resources
- Ownership of land
How many is the required vote for amendment of articles of incorporation
majority of the board of directors or trustees and ratification of the stockholders representing at least two-thirds of the outstanding capital stock or two-thirds of the members
When is the effectivity of approval of amendment of articles of incorporation
upon approval by the SEC upon lapse of six months from the date of submission to SEC if there is an action by SEC for causes not attributable to the corporation
The corporation is ipso facto or automatically dissolved by operation of law without need of a court order or sec decision due to the failure of the corporation to formally organize for a period of at least ____ years after its formal organization
five
A delinquent corporation shall have a period of____ years to resume operations and comply with all the requirements that the SEC shall prescribe
two
True or false. The articles of incorporation and its bylaws are of equal importance
false
When shall the bylaws be submitted to the SEC
at the time of submission of the articles of incorporation
Required vote for adoption of pre incorporation bylaws
all corporators or subscribers or member founders
Required vote for the amendment of post incorporation bylaws when there is no valid stockholders delegation to the board of directors of the power to adopt or amend bylaws
at least majority vote of the board of directors and approval by at least majority of stockholders
Required both for amendment of post and corporation bylaws when there is valid stockholders delegation to the board of directors of the exclusive power to amend bylaws
at least majority of the board of directors
Required vote for delegation to the board of directors of the power to adopt or amend post and corporation bylaws by stockholders
at least two third vote of the stockholders
Required vote for the revocation of delegated power to board of directors to amend pause and corporation bylaws by stockholders
at least majority of the stockholders
Number of members of the board for ordinary non-stock corporation
not more than 15
Number of members of the board four educational non-stock corporations
5 or 10 or 15
Term of office of members of the board of directors for
- Stock corporations
- Ordinary non-stock corporations
- Educational non-stock corporations
1, 3, 5 yrs
What are the qualifications of members of the board of directors or trustees
- Owner of at least one share or a member
- Legal age
- Not be more than 15 in case of directors and maybe more than 15 in case of trustees
- Majority must be resident of the philippines except when there is a required minimum ownership of filipinos
The board of directors of corporations vested with public interest should have independent directors constituting at least ___ percent of such board
20%
Corporations vested with public interest
50 registered others
1. Corporations whose securities are registered with SEC, listed with an exchange
- Corporations with assets of at least 50 million and having 200 or more shareholders, each holding at least 100 shares of a class of its equity shares
- Financial institutions
4.Other corporations as may be determined by the SEC
Corporations with assets of atleast ______ and having ____ shareholders, each holding at least ____ shares of a class of its equity shares or vested with public interest
50 million, 200 or more, 100
Can an independent director receive shareholdings and fees from the corporation
yes
Grounds for permanent disqualifications of members of the board for a period of at least five years from conviction
- Final judgement of an offense punishable by imprisonment for a period exceeding 6 years for violating the code or for violating the securities regulation code
- Administratively liable for any offence involving fraudulent acts
- By a foreign court four acts similar to those enumerated above
- Judicially declared as insolvent
- an independent director who becomes an officer of the same corporation
election
…
are the directors entitled to compensation
no except reasonable per diems
What is the required vote for granting compensation to board of directors
at least majority of the outstanding capital stock excluding the directors
What is the maximum limit for salary of board of directors
10% of net income before tax
An executive committee must be created only by virtue of provision in the ______
bylaws
At least how many members an executive committee consist of
three
What are the powers that cannot be delegated by board of directors to executive committee FilByRatDiv
- Filling up of vacancy in the board
- Adoption or amendment of bylaws
- Approval of corporate acts requiring approval or ratification by stockholders
- distribution or declaration of dividends
Required vote for approval of act of administration or management
majority of the directors who attended the meeting with quorum
It means that the decision of the board of directors on matters of management cannot be changed by the court unless such management decision is ultra vires or destructive of the interest of minority stockholders
business judgment rule or doctrine of management prerogative
Required vote for election of corporate officers
at least majority of the directors or as a stated in the articles of incorporation
Qualifications of a corporate president
- Stockholder
- Director
- Neither secretary nor treasurer
Qualifications of a corporate secretary
- Filipino national
- Resident
- not the president
Qualifications of a corporate treasurer
- Must not be a president, except for OPC
- Resident
What are the three fold duties of directors
loyalty, obedience, diligence
What is the status of a contract with self-dealing director
voidable on the part of the corporation
Vote for ratification in case of voidability of a contract with self-dealing director
at least two-thirds of the outstanding capital stock
What is the contract between corporation with interlocking director
generally valid
Where is the place of meeting of board of directors
- Place is stated in the bylaws
- Anywhere around the world
Frequency of meeting of board of directors
- Frequency stated in bylaws, or
- Monthly
Minimum days of giving notice to directors for meeting of board of directors
at least 2 days before the scheduled meeting
It is a legal agreement that grants operational control of a business in associative to a separate group
management contract
How many volts are required for approval of management contract without interlocking director
- At least majority vote of board of directors with ratification of at least maturity of stockholders of managing and managed corporation
How many is the required vote for approval of management contract with interlocking director
at least majority vote of board of directors with ratification of at least two-thirds of stockholders for the manage corporation and the managing corporation
It means that all shares have equal rights except as provided in the articles of incorporation
doctrine of equality of shares
Stocks which completely have no voting rights
- Treasury shares
- Delinquent shares
- Fractional shares
- Escrow shares before the fulfillment of suspensive condition or arrival of suspensive period
Requirements of proxy for validity
- Valid only for that particular meeting unless classified as continuing proxy
- In writing
- Filed before the scheduled meeting with the corporate secretary
- Signed by the shareholder or member concerned
- Valid and effective for a period of five years at any one time
How many years is the term for a proxy
not exceeding five years
It refers to the agreement whereby stockholders of a stock corporation confers upon a trustee the right to vote and other rights pertaining to the shares and it should not be used to circumvent the law against monopolies and illegal combination in restraint of trade or for fraud purposes
voting trust agreement
What are the requirements of voting trust for validity
- In writing
- Notarized
- Filed before the corporate secretary
- Valid and effective for a period of five years at any one time
How many years is a term of voting trust
not exceeding five years
There is a transfer of title in this agreement
a. Trustee
b. Proxy
trustee
True or false. Both proxy and voting trust agreement are irrevocable.
False. Only voting trust agreement is irrevocable
The proxy votes as an agent while a trustee votes as a/an ________
owner
Where is the place of meeting of stockholders
always in the city or municipality where the principal office of the corporation is located preferably in the principal office of the corporation
The frequency of meeting of stockholders
- Frequency stated and bylaws
- Annually
Date of meeting of stockholders
- Date stated in the bylaws
- Any date after april 15
Minimum days of giving notice to stockholders for regular and special meeting
21; 1 week
Can dividends be declared even without unrestricted retained earnings
no
True or false. Subscribers are entitled to dividends only up to the paid up shares
false. Entitled fully
are delinquent subscribers entitled to dividends
yes, but the cash dividends shall be offset to the subscription balance while the certificate of stocks of stock dividends will be withheld until the subscription balance is fully paid
Determine whether this is a justified ground for denial of right to inspection of corporate books
to find technical defects in corporate transactions in order to bring strikes suits for purposes of extortion
unjustified
What is the remedy if the denial of the right to inspect by the corporation is unjustified
- File a petition for mandamus against the said corporate officer
- Action for damages against the said corporate officer
- Criminal action for violation of corporation code against the responsible officer
It refers to the common law right of shareholders to subscribe to all issues or disposition of shares of any class in proportion to their present shareholdings unless denied in the articles of incorporation
preemptive right
Determine whether the preemptive right is available or not in the following circumstances
- Shares to be issued to comply with laws requiring stock offering or minimum stock ownership by the public such in the case of initial public offering
- Issuance of shares in exchange for a property or payment of contracted debts
- In case of non stock corporation
- When the preemptive right is not stated in the articles of incorporation
no, no, no, yes (inherent, but may be denied)
True or false. Preemptive right can be denied in the bylaws and the required vote for the denial of preemptive right is ________
false, articles of incorporation. 2/3 of outstanding capital stock
It provides that a stockholder who may wish to sell or assign his shares must first offer the shares to the corporation or to other existing stockholders of the corporation under terms and conditions which are reasonable; and that only when the corporation or the other stockholders do not fail to exercise their option is the offering stockholder at liberty to dispose of his share to third parties
right of first refusal
It refers to the right of a dissenting stockholder to demand payment of the fair value of his shares after dissenting from a proposed corporation action involving a fundamental change in the corporation
appraisal right
Stockholder can exercise appraisal right even without unrestricted retained earnings. True or false
false
What are the grounds for exercise of appraisal right AITDC
AIM-CSC)
- Major amendment of the articles open corporation
- Investment of corporate funds in another corporation or in a purpose other than the primary purpose
- Changing corporate term
- Disposition of all or substantially all of the corporate property or assets
- In case of close corporations when the corporation has sufficient assets in its books to cover its debts and liabilities exclusive of capital stock
The dissenting stockholder shall make a written demand on the corporation within______ after the date on which the vote was taken for the payment of the fair value of his shares
30 days
The withdrawing stockholder must submit his shares to the corporation for notation of being dissenting stockholder within ________ from his written demand
10 days
When shall all the rights of a dissenting stockholder be suspended?
From time of demand for payment of the fair value of shares
The payment for the fair value of shares of a dissenting stockholder must be made by the corporation within ________ from determination by the board of appraisers, other words the rights of the dissenting stockholders will be restored
30 days
All the rights of a dissenting stockholder are terminated and not merely suspended upon
payment of the fair value of shares
It is an action brought by the stockholder against the corporation for direct violation of his contractual rights
individual suit
It is an action brought by person in his own behalf or on behalf of all similarly situated
representative suit
It refers to a suit brought by one or more stockholders or members in the name and on behalf of the corporation to redress wrongs committed against it or to protect or vindicate corporate price whenever the officials at the corporation refuse to sue or or the ones to be sued or hold control of the corporation. The corporation is necessary for to the suit.
Derivative suit
True or false. a derivative suit can only be filed by a person who must be is shareholder to enforce a corporations cause of action
true
It means that a stockholder is personally liable for the financial obligations of the corporation to the extent only of his and paid subscription or stockholders liability for corporate debts extends only up to the amount of his capital contribution
limited liability rule
True or false. A bonus share is a watered stock
true
It is a stock issued as a stock dividend where there are no sufficient retained earnings or circles to justify it
watered stock
Consenting or non objecting director or officer, subscriber, subsequent transferor, and transferee shall be __________ liable for the difference between the fair value received at the time of issuance of stock and the par or issue value of the same
a. Jointly
b. Proportionately
c. Subsidiarily
d. Solidarily
solidarily
True or false. A contract of subscription is a divisible contract
false
A contract of subscription is a formal contract. True or false
false. Consensual.
Contract of subscription is not covered by statute of fraud. True or false
true
A pre-incorporation subscription is irrevocable for a period of _______ from the date of subscription and after its submission to SEC
6 months
True or false. the period for cancellation of pre incorporation subscription was made before its submission to SEC
true
It was incorporation subscription may be revoked if there is unrestricted retained earnings to support its retirement in order not to violate trust fund doctrine. True or false
true
A subscriber of shares of stocks which are not yet delinquent are entitled to the rights of a full-fledged stockholder except the right to
issuance of certificate of stocks
Determine whether the following or valid consideration for issuance of shares of stocks
a. Pre-existing obligation of the corporation in case of equity swap
b. Promissory note
c. Unrestricted retained earnings in case of distribution of stock dividends
d. Future services
yes no yes no
Interest accrues upon lapsing of 30 days from the date stated in the subscription contract. True or false.
True.
True or false. interest will still accrue even if there is no stated interest in case of delinquency shares
true, upon lapsing of 30 days from the date of payment as a stated in the call of board of directors for payment
What rights are suspended for subscribers with delinquent shares
all rights except the right to receive dividends
What are the remedies of corporation for delinquent shares
- Civil action by filing before a regular court an action to collect a sum of money
- Sale of delinquent shoes
a. To highest bidder
b. Acquisition by corporation and placing them to treasury
c. Period fixed by law for the sale of delinquent shares of not less than 30 days or more than 60 days from the date the stock become delinquent
True or false. A certificate of stock is negotiable
false, although it may be transferred by endorsement coupled with delivery
Entries in the stock and transfer books can be made by any corporate officer
false. All entries must be made by the corporate secretary in the absence of a stock and transfer agent employed by the corporation. Otherwise, such entry will be null and void
Involuntary modes of dissolution
5 sec ex leg
- Expiration of corporate term
- Failure to formally organized within five years from incorporation
- Legislative dissolution
- Dissolution by the sec on grounds under existing laws
How is a corporation dissolved where creditors are not affected
by administrative application to sec submitting the board resolution of majority of the board of directors and ratification by at least 2/3 of stockholders
How is a corporation dissolved where creditors are affected
by formal petition to sec with notice and hearing with the creditors; at least majority vote of the board of directors with ratification of at least two-thirds of the stockholders
Determine whether a corporation is dissolved or not in the following cases
a. Shortening of corporate term
b. Changing of principal office
c. Merger or consolidation
Yes no yes
What are the grounds for automatic dissolution of a corporation or ipso facto corporate dissolution by operation of law
a. Expiration of corporate term
b. Failure to formally organized within five years from incorporation
c. Approval by sec of shortened corporate term
d. Approval by sec of certificate of merger or consolidation
5 short exes merged
What are the grounds which will not automatically dissolve a corporation but will require court order or sec decision
5 facts of violation report
a. Being de facto
b. Violation of laws or rulings of sec
c. failure to submit annual report or financial statement to sec
d. Continuous in operation for a period of at least five years
The period of liquidation shall be finished within a recommendatory period of _____ from the date of dissolution of a corporation
3 years
The number of stockholders in a close corporation must not exceed
20
True or false. The stocks of a close corporation can be listed in the stock exchange and can publicly be offered
false
True or false. a corporation shall not be deemed close when majority of its voting stocks are owned or controlled by another corporation which is not close
false. 2/3
Which statements are false
a. Stockholders in a close corporation may act as directors without need of election and therefore liable as directors
b. the quorum in a close corporation is the majority of the stockholders
c. corporate actuations may only be bonding with a formal board meeting
d. Appraisal rights can be exercised regardless of existence of unrestricted retained earnings
e. Preemptive right is absolute in a close corporation and available to all stuff issuances unless restricted by the articles of incorporation
f. Deadlocks are settled by third person
b. May be greater than mere majority
c. May be binding even without a formal board meeting
f. By the sec
Disqualified corporations to be classified as close corporations
corporations vested with public interest, finance companies, educational institutions, public utilities, oil and mining companies
What is the status of an absolute prohibition on sale of shares of stocks in a close corporation
void
which is/are false
a. The preemptive right of stockholders in a close corporation is absolute in nature and there are no exceptions
b. Appraisal right can only be exercised for a justifiable reason
b. Any reason
Other than the SEC’s approval, what other authoritative body must approve merger or consolidation of close corporations
philippine competition commission
Who may not become one person corporation
a. Natural person
b. Trust Established by a trust or to a trustee for the benefit of a beneficiary
c. Juridical person
d. estate of a deceased person
c
True or false
a. The one person corporation is not required to submit and file corporate bylaws.
b. A one person need not to indicate the letters “OPC” in it’s corporate name
true
false
Within _______ from the issuance of its certificate of incorporation, the one person corporation shall appoint a treasurer, corporate secretary and other officers, and notify the commission thereof within ______ from appointment
15 days, five days
True or false
a. The one person corporation may be appointed as the corporate secretary
b. the one person corporation may be appointed as the treasurer
false, true
The self-appointed treasurer of a one person corporation shall undertake in writing to faithfully administer the corporation’s funds to be received as treasurer and to disburse and invest the same according to the articles of incorporation as approved by the commission. The bond shall be renewed every ________ or as often as may be required.
2 years
The corporate secretary in one person corporation notify the nominee or alternate nominee of the death or incapacity of the single stockholder, which notice shall be given no later than _______ from its occurrence
five days
The articles of incorporation is amended when there is a change of nominee or alternate nominee. True or false
false. The single stockholder may change the nominee by submitting to the commission the names of the new nominees and their corresponding written consent
What are the reportorial requirements of one person corporation
self fs reports
- Financial statements audited by an independent cpa; provided, if the total assets or total liabilities of the corporation are less than 600,000 pesos, the financial statements shall be certified on their own by the corporations treasurer and president
- Report containing explanations or comments by the president on every qualification, reservation, or adverse remark or disclaimer made by the auditor in the latter’s report
- Disclosure of all self dealings and related party transactions entered into between the one person corporation and the single stockholder
- Other reports
For the single stockholder cannot prove that the property of the one person corporation is independent of the stockholders personal property, the stockholder shall be ___________________ liable for the debts and other liabilities of the one person corporation
a. Jointly and proportionately
b. Jointly
c. Jointly and severally
d. subsidiarily
c
The one person corporation shall notify the sec within _______ from the occurrence of the circumstances leading to the conversion into an ordinary stock corporation.
60 days
In case of death of the single stockholder, the nominee or alternate nomination transfer the shares to the chili designated legal heir or estate within ________ from the receipt of either an affidavit of heirship or self adjudication executed by a sole heir, or any other legal document declaring the legal heirs of the single stockholder and notify the commission of the transfer
7 days
Within ______ from the transfer of the shares, the legal heirs shall notify the commission of their decision to either windup and dissolve the one person corporation or convert it into an ordinary stock corporation
60 days
When does a one person corporation acquire juridical personality and legal existence
from the filing of verified articles
True or false. The personal liability on contracts made by a promoter for the benefit of a corporation he intends to organize ends after the formation of the corporation
false, it continues even after formation of the corporation unless there is notation or other agreement to release him from liability
Which statement or statements is/are false
a. Insurance companies can not engage in commercial banking at the same time, and vice versa
b. Stock brokers can have no other line of business not peculiar to them
c. The retail trade for the corporate capital is greater than 2.5 million dollars or reserved exclusively for filipinos or for corporations or partnerships wholly owned by such citizen
d. Corporations with foreign equity are not allowed to engage in restaurant business what corporations with such foreign equity can pursue such undertaking if it is incidental or in connection with hotel or in keeping business
e. In the case of customs brokerage business, the applicant must submit the license of at least 3 custom brokers connected with the applicant corporation
f. Carriage of mails cannot be a purpose of a corporation unless a special franchise has been granted to it
c. less
e. 2
The place of operations of a corporation serves as the place for registration of chattel mortgage of shares. True or false
false. Principal office
For financing companies, sec requires minimum paid up capital of _________ within metro manila, ________ for other cities, _____________ 4 municipality
10 million, 5 million, 2 million
How much is the required minimum paid up capital HMOs and insurance brokers
10 million, 20 million
What is the composition of outstanding capital stock
total number of shares issued, including those which are subscribed and not yet fully paid, but excluding treasury shares
For closed corporations restrictions and preferences was not only appear in the articles of incorporation and in the stock certificates but also be embedded in the _____________ of that closed corporation otherwise it may not bind purchasers in good faith
bylaws
What is the quorum for the election of members of the board or trustees for an election to be valid
majority of the outstanding capital stock or members
The rcc requires a report within _______ to be submitted to the sec in case of non holding of elections which shall include a new date for the election which shall not be later than __________ from the scheduled date
30 days, 60 days
Should a director, trusting or officer die, resign or in any manner ceased to hold office, the secretary, or director, trustee or officer of the corporation or in case of death, the officers heirs shall, within_______ from the knowledge thereof, report in writing such fact to the sec
7 days
True or false. In non-stock corporations, cumulative voting is generally not allowed unless allowed by the aoi or bylaws of the corporation
true
The sec is now empowered to motu proprio and after due notice and hearing, order the removal of a director or trustee elected despite the disqualification or whose disqualification arose or is discovered subsequent to an election. True or false
true
It is the only cause of vacancy or by a board of director can fill the vacancy
death, resignation or abandonment, if they still constitute a quorum
When will the election be held if the cause of vacancy in the board of directors is death, resignation, or abandonment
no later than 45 days from the time the vacancy arose
Who shall fill the vacancy after the resignation of a board of director who functions in a hold over capacity
the stockholders Even if the remaining directors continue to constitute a quorum
It places a director of a corporation in the position of a fiduciary and prohibits him from ceasing a business opportunity and or or developing it at the expense and with the facilities of the corporation
corporate opportunity doctrine
True or false. Acquiring adverse interest on a matter reposed in a board of director in confidence is subject to ratification
false
The approval for transactions of self-dealing directors of corporations vested with public interest shall require
- at least two-thirds of the entire membership of the board,
- At least a majority of the independent directors
The contract between corporations with interlocking director is generally valid except
- Fraud
- In the interest of the interlocking director in one corporation exceeds 20% (substantial) and in the other merely nominal; voidable
What are the board committees under the revised code of corporate governance
- Audit committee
- nomination committee
- compensation or remuneration committee
Required vote for the election of corporate officers
majority of all members of the board, not just the usual majority of those present in the meeting
The compliance officer shall issue is certification every ____________ of the year on the extent of the corporations compliance with the code for the completed here and, if there are any deviations, explain the reason for such deviation
january 30
Who shall be entitled to the delinquent shares purchased by the highest bidder and to the remaining shares
the highest bidder and the delinquent stockholder
If there is no bidder at the public auction, and the corporation bid for the same, who shall be entitled to the shares purchased and to the remaining shares
title to all the shares of stock covered by the subscription shall be vested in the corporation as treasury shares
Instances requiring majority vote of the board of directors and conference of the stockholders representing 2/3 of the outstanding capital stock
I3 AM SPD VcManDiv
- Increase or decrease in corporate stock
- Incur or create bonded indebtedness
- Dispose all or substantially all of corporate assets
- Invest in another corporation other than primary purpose
- Amend the articles of incorporation
- Merger or consolidation
- Voluntary dissolution where creditors are affected
- Extend or shorten corporate term
- Deny preemptive right
- Declares stock dividends
- Enter into a management contract for stockholders own 1/3 of the capital stock of the management corporation or a majority of the members of the board of the mansion corporation also constitute a majority of the board of the managed corporation
Instances requiring majority of the board of directors and majority of the outstanding capital stock
- Enter into a management contract
- adopt, amend, repeal bylaws
Instances requiring no board resolution but only two thirds of the stockholders
DelRemRaRat
- Delegate to the board the power to amend the bylaws
- Remove a member of board of directors
- Ratify a business opportunity and third into a number of the board in case of corporate opportunity doctrine
- Ratification of contracts of self-dealing directors, where his presence is required to constitute a quorum and or or his vote is required for its approval by the bored
Instances requiring no board resolution but only a majority of the stockholders
Revoke Special compensation par
- Revoke delegated power to amend bylaws
- Calling a special meeting to remove directors
- To fix compensation of directors
- To fix the issue price or stated value of no-par value shares in the absence of the board
If the corporation denies or does not act on a demand for inspection and or or reproduction, the aggrieved party may report such to the sec. Within _______ from receipt of such report, the sec shall conduct a summary investigation and issue an order directing the inspection or reproduction of the requested records
five days
The submission of the amended bylaws requires that it be filed with the sec attached to the original articles of incorporation and original bylaws. True or false
false. It need not attach the original articles of incorporation and original bylaws
What is the quorum for directors and stockholders
majority
Unless the bylaws provide for a longer period, the stock and transfer book or membership book shall be closed at least _______ for regular meetings and _______ for special meetings before the scheduled date of the meeting
20 days, 7 days
True or false. A non stock corporation can be organized for profit
true
The term of office for trustees
1/3 of the number of directors shall expire every year; trust is so elected shall have a term of three years, except for educational institutions for which the term is 5 years
True or false. the place of meeting of members of a non stock corporation is its principal office
false. Any place in the philippines
True or false. The courts can interfere when a person is deemed unfit for membership by a non stock corporation
false
This test considers a corporation as of philippine nationality when at least 60% of its capital owned by filipino citizens
control test or liberal rule
According to the grandfather rule, if the percentage of filipino ownership in the corporation or partnership is less than _______ only the number of shares corresponding to such percentage should be counted as of philippine nationality
60%
When is the grandfather rule applied
- The corporation’s filipino equity falls below threshold required
- There exists doubt as to the filipino or foreign equity
This corporation is required that it is of sound financial standing and must show proof that it is in good standing as certified by the sec
resident agent corporation of a foreign corporation
True or false. Investment as a shareholder by a foreign equity in domestic corporation duly registered to do business and or or exercise of rights as such investor constitutes “doing business”
false
True or false. General waiver of notification in the articles of incorporation or bylaws shall not be allowed
true
Stockholders should be notified _______ before the postponement of a regular meeting
two weeks
Who are the persons authorized to call a meeting
- The person designated in the bylaws
- The president
- The sec upon petition of a stockholder
- The secretary on order of the president or upon written demand of the stockholders representing at least majority of the outstanding capital stock, in case of removal of director or trustee
True or false
in a board meeting, an abstention is presume to be counted as an affirmative vote in so far as it may be construed as an acquiescence in the action of those who voted of you massively
true
When a special law is repealed, the corporation is also dissolved
legislative dissolution
Under the financial rehabilitation and insolvency act, the suspension of payments is only applicable to _________ debtors
individual
True or false. An independent trustee need not to be a member of a non-stock corporation Vested with public interest
true
Can a foreign corporation be a resident agent of a foreign corporation
no. domestic corporation
Can a resident agent sign the certificate of non forum shopping on behalf of the foreign corporation
no while a resident alien may be aware of the action filed against the principal, he or she may not be aware of the actions initiated by it
Procedure of registration of securities
- Filing of __________________________________ containing the information as the sec made by rule require
- Payment of the filing fees which shall not exceed ________ of the aggregate price at which such securities are proposed to be offered
- Publication notice of the filing of the registration statement in ____ newspapers of general circulation _____ for ____ consecutive weeks
- Within _____ after the filing date, or by such later date to which the issuer has consented, the sec shall give an order declaring the registration statement effective or rejecting it
- ___________ under oath that all requirements satisfied and all statements in registration statement had in such are correct
- Sworn registration statement
- 1/10 of 1%
- Two, once, two
- 45 days
- Prospectus
Which of the following securities is not exempt from registration
a. Securities issued by the government
b. Securities issued by a foreign government
c. Securities issued by a public interest entity
d. Certificates issued by a receiver or by a trustee in bankruptcy duly approved by the proper adjudicatory body
e. Securities issued by a bank other than its own shares of stocks
f. Securities under the supervision of other regulatory bodies
c
Transactions exempt from registration (bisceps smile)
- Brokers transaction
- Isolated transactions
- Stock dividends
- Converted securities
- Exclusive sale
- Private placement
- Subscriptions
- Sale to sophisticated buyers
- Mortgage-backed securities
- Judicial sale due to insolvency
- To liquidate a bonafide debt
- Exchange of securities by the issuer with the existing security holders exclusively
A petition for voluntary dissolution where creditors are affected shall be signed by
majority of its board of directors or other officers managing its affairs
