Finals (SH-Foreign Corp) Flashcards
(44 cards)
TITLE VII Stocks & Shareholders
A subscription of shares in a corporation still to be formed shall be IRREVOCABLE for a period of?
sec 60
(6) months from the date of subscription unless
- all subscribers consent to the revocation, [or]
- corp fails to incorporate w/n the same period or longer stipulated in the Contract of Subscription
can a pre-incorporation subscription be revoked?
sec 60
No, after articles of incorporation is submitted to the SEC, then pre-incorporation subscription cannot be revoked
Can you subscribe on credit?
There is no expressed prohibition on credit.
what is Debt to equity conversion?
This is insofar as considerations for stock is concerned where the corporation who is indebted to a person pays their obligation through shares of stock making you the creditor now a SH
Corporation converts its debt (owed to creditors) into equity (shares).
A agreed to 1k shares but paid only 600. can he demand for issuance of stock cert of the 600 and pay later some other time the 400?
No, SEc. 63
ABC Corporation has a par value of ₱100 per share. To attract more investors, its board of directors decided to issue shares for ₱70 each advertising it as a 30% off discount.
Is this valid?
No, it is a watered stock and a watered stock are not valid shares of stock such that they are deemed as if they have never been issued in the first place
how to make a valid transfer of shares of stock?
62 (2)
transferred by DELIVERY of the cert ENDORSED by the owner/his atty-in-fact/any other legally authorized to make transfer
no transfer will be valid until the transfer is recorded in the books of corporation
A’s name was recorded in the general information sheet submitted to the SEC by XYZ corp.
is he a stock holder?
No, based on prevailing JP.
best proof is stock and transfer book while the stock cert is corroborative
Director consented for a SH who paid 1peso for 100 pesos per shares
a. what is the liability of a director who consented to the issuance of a stock
b. who can demand from the director?
c. suppose the answer in B will not take action, what is the remedy?
a. you liable solidary with that SH who paid 1peso to the 99pesos not paid
b. the corporation itself
c. other SH can file a derivative suit to compel the director and SH to pay the required amount
a. when do you pay for your subscription?
b. if there has been capital call or period to pay has elapsed and no payment was made, what happens to your shares?
c. why is it important to know w/n a stock is delinquent?
d. in the answer of B, when should it be done or what period?
a.
GR: pay based on the SubCon
XPN: if not provided, upon capital call of the board
b.
- if no payment made within 30 days (grace period) from said date, ALL stocks covered by the subscription becomes delinquent
- & shall be subject to sale unless BoD orders otherwise
c. - because delinquent stocks no longer have voting rights but still has right to dividends
d - not less than 30 (grace period) nor more than 60 days for the public auction to be held (sec. 67)
amount due: 1m
necessary costs: 100k
auctioned shares: 1k
bidders:
A - 1m for 900 shares
B - 1.5m for 1k shares
C - 1.1m for 1k shares
D - 800k for 900 shares
what are the conditions in this auction sale
- full amount (1m)
- least number of shares
B wins
a. and the delinquent shares are 1000 and total amount due is 1million, considering the two conditions, who will be the winner:
Bidder A: Will pay ₱1,000,000 for 1,000 shares.
Bidder B: Will pay ₱1,000,000 for 900 shares.
Bidder C: Will pay ₱1,000,000 for 800 shares.
b. what happens to the remaining shares?
c. what happens if there are no bidders?
a-b
200 goes back to the original subscriber who was the delinquent SH who did not pay because the shares are not fully bidded
c. Corp buys it back and becomes treasury shares
can you question the auction?
Yes, on the ground of irregularity or defect in the NOTICE OF SALE [or] SALE itself
- tendering the amount due with all interest from date of the sale plus legal interest
- within the period of (6 months) from date of sale
can a corp do public bidding and take court action at the same time or is it alternative?
They can avail both so long as there is unpaid amount
TITLE VIII: Corporate Books & Records
a. what if the total liabilities or total assets exceed 600k?
b. suppose it is less than the amount
a., then needs to be signed by the pres, treasurer, and audited by independent CPA
b. mere certification under oath by the pres. or treasurer will suffice.
Title IX: Merger & Consolidation
a. merger
b. consolidation
a. A + B (constituent corp) = A (surviving corp)
b. A + B = C (consolidated corp)
M&C de facto v. Statutory M&C
[de facto]
- no automatic dissolution
- transfer of assets or management
[statutory]
- automatic dissolution
- covered by chapter 9
what is the Nell Doctrine
when is it applicable
a. Nell Doctrine states as a general rule, transfer of all assets of a corp to another SHALL NOT render the latter liable to the liabilities of the transferor except;
- purchaser expressly or impliedly agrees to assume such debts
- transactions amounts to consolidation or merger of the corporation (precisely the liabilities continue)
- purchasing corp is merely a continuation of the selling corp, and
- transaction is entered into fraudulently to escape liability
b. applicable only to de facto merger in a purchase of all or substantially all of the assets
M&C applicable to stock corp when the voting in order for the plan of merger to be approved only mentions 2/3 of the OCS?
False, it is applicable to non-stock as well.
what are the contents of M/C?
sec. 77
a. plan of merger or plan of consolidation
b. as to stock corps, # of shares outstanding as to non stock, # of members
c. as to each corp, # of shares/members for or against such plan
d. the **carrying amounts & fair values of the assets & liabilities of the respective companies as of the agreed cut-off date
e. method to be used in the M/C of accounts of the companies
f. The provisional or pro forma values, as M/C, using the accounting method, and
g. such other information as may be prescribed by the commission
when do M/C take effect?
what are the effects of M/C?
a. issuance of Certificate of M/C that
b.
- constituent corp becomes surviving corp or consolidated corp as the case may be
- the separate existence of the previous constituent corp ceases
- the surviving or consolidated corp shall possess ALL [rpip] rights, privileges, immunities, and powers [and] be subject to all duties & liabilities of a corp under the RCC
- the surviving or consolidate corp shall possess all [rpif] rights, privileges, immunities, and franchises of each constituent corp [and] ALL real/personal property, ALL receivables due…W/O further act or deed
- S/C corpis responsible for ALL liabilities & obligation of each constituent corp [and] any PENDING claim brought by or against the S/C corp may be prosecuted
In one of the effects for merger
and consolidation, it says that the company will be liable for the obligations, liabilities, and constituents. But what if in the case one constituent owes money to the other constituent? So what happens to the receivables or debt between the two companies?.
M/C will extinguish the obligation but in practice it will be part of the plan of merger/consolidation
Can a non-stock and stock merge to a stock corporation?
Can a non-stock and stock merge into a non-stock?
a. No, because it will amount to distribution of goods/assets which is prohibited under a non-stock
b. Yes, no prohibition
Title X: Appraisal Right
when can the appraisal right be exercised?
- amendment to AOI with the effect of changing/restricting the rights of any SH or class of shares
- authorizing preferences in any respect superior to those of outstanding shares of any class
- extending/shortening corporate term
- in case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of ALL or SUBSTANTIALLY ALL of CORPORATE property & assets
- in case of Merger or Consolidation
- In case of investment of corporate funds for any purpose other than the PRIMARY purpose of the corp
