Law on Corp - INCORP and ORG of PRIV CORP Flashcards
How to form a Corporation?
- Promotion
- Incorporation
- Formal Organization and Commencement of Business Operations
Promoters would bring together who may form the corporation
True or False?
True
You can do away with promotion. The incorporators can opt not to hire promoters and create the corporation themselves.
True or False?
True
Process of drafting documents, securing certificates, etc. that bring about the formation of the corporation
Incorporation
What are the steps in incorporation?
- Verification with the SEC of the name to be used. This may be done online or with the SEC Name Verification Unit.
- Drafting and execution of the articles of incorporation signed by the incorporators.
- Filing of the articles of incorporation with the SEC, together with following documents
Under
- Verification with the SEC of the name to be used. This may be done online or with the SEC Name Verification Unit.
This is to ensure that the name adopted by a corporation is distinguishable from that already reserved or registered for the use of another corporation, or is not one already protected by law or which is contrary to existing law, rules and régulations.
True or False?
True
The articles of incorporation must comply with the requirements provided for in Sections 13 and 14.
True or False?
True
Under
- Filing of the articles of incorporation with the SEC,
What are the following documents?
a. Verification Slip/Certificate authorizing the use of the corporate name obtained in No. 1 above.
b. Treasurer’s Affidavit to the effect that the paid-up portion of the subscription in cash and/or property for the benefit and credit of the corporation has been duly received.
c. Joint Affidavit of two incorporators to change corporate name unless the undertaking to change the corporate name is already stated in the articles of incorporation.
d. Endorsement/clearance from a department of the SEC or other government agencies, if applicable.
e. Payment of the filing, legal research and other fees.
d. Issuance of the certificate of incorporation by the SEC.
The steps is the operative act that will confer juridical personality on the corporation. A corporation commences its existence and juridical personality from the date stated in the certificate, which is actually the date of issue.
True or False?
True
- Steps are only SUBSTANTIAL compliance
Under Section 13 of the Revised Corporation Code, the articles of incorporation and applications for amendments thereto may be filed with the SEC in the form of an electronic document, in accordance with the SEC’s rules and regulations on electronic filing.
True or False?
True
What are the kinds of franchise?
- Primary franchise
- Secondary franchise
It is also known as corporate franchise. It refers to the right and privilege granted by the State to exist as a corporation and to do such things as are authorized by the charter of the corporation.
Vested in the individuals who compose the corporation and not in the corporation itself. It is conferred through the issuance of the certificate of incorporation.
Primary Franchise
This refers to different rights, privileges and powers which are: obtained by the corporation, which are not a prerequisite to corporate existence such as the right to occupy and use public places for the operation of a system of water, gas works, electricity lighting plants, railroad, etc.,
Secondary franchise
Who may be incorporators?
a. Natural person.
b. Partnership:
c. Association.
d. Corporation.
How many should be number of incorporators for an ordinary corporation?
Two (2) or more persons, but not more than fifteen (15), may organize themselves and form a corporation.
How many should be number of incorporators for a One Person Corporation (OPC)?
only one incorporator is required who is also the single stockholder and sole director.
What are the qualifications of incorporators for a stock corporation?
Each incorporator must own, or be a subscriber to at least one (1) share of capital stock.
What are the qualifications of incorporators for a non-stock corporation?
Each incorporator must be a member of the corporation.
Under the qualifications of incorporators
The incorporators may be composed of any combination of natural person/s, SEC-registered partnership/s, SEC-registered domestic corporation/s or association/s, as well as foreign corporation/s.
True or False?
True
What are the qualifications of incorporators who are natural persons?
Incorporators who are natural persons must be of legal age, and must sign the articles of incorporation/bylaws.
GPP cannot form a corporation
True or False?
True
Under Partnerships as incorporators
If an SEC-recorded partnership is made an incorporator, the application for registration must be accompanied by?
A Partners’ Affidavit, duly executed by all the partners
- to the effect that they have authorized the partnership to invest in the corporation about to be formed and that they have designated one of the partners to become a signatory to the incorporation documents.
Partnerships under “dissolved” or “expired” status with the SEC shall not be authorized to become an incorporator.
True or False?
True
Under Domestic corporations or associations as incorporators
If an SEC-registered domestic corporation is made an incorporator, its investment in the new corporation must be approved by?
Majority of the board of directors or trustees
It must also be ratified by the stockholders representing at least two-thirds (2/3) of the outstanding capital stock, or by at least two-thirds (2/3) of the members in the case of nonstock corporations, at a meeting duly called for the purpose.
If an SEC-registered domestic corporation is made an incorporator, its investment in the new corporation must be approved by a majority of the board of directors or trustees and ratified by the stockholders representing at least two-thirds (2/3) of the outstanding capital stock, or by at least two-thirds (2/3) of the members in the case of nonstock corporations, at a meeting duly called for the purpose.
True or False?
True
Under Domestic corporations or associations as incorporators
A Directors’/Trustees Certificate or a Secretary’s Certificate, indicating the neces necessary approvals, as well as the authorized signatory to the incorporation documents, shall be executed under oath and submitted by the applicant.
True or False?
True
Domestic corporations under “delinquent”, “suspended”, “revoked”, or “expired”, status with the SEC shall not be authorized to become an incorporator.
True or False?
True
Under Foreign corporations as incorporators
If a foreign corporation is made an incorporator, the application for registration must be accompanied by?
A copy of the document (i.e., Board Resolution, Directors’ Certificate, Secretary’s Certificate, or its equivalent), duly authenticated by a Philippine Consulate or which an apostille is affixed thereto
- authorizing the foreign corporation to invest in the corporation being formed and specifically naming the designated signatory on behalf of the foreign corporation.
An Apostille is a certificate that authenticates the origin of a public document. It is issued by a country that is party to the Apostille Convention to be used in another country which is also a party to the Convention.
True or False?
True
Under Signatories of the articles of incorporation
Each individual signing the articles of incorporation/bylaws must indicate the capacity which he/she is affixing his/her signature thereto
True or False?
True
Under Signatories of the articles of incorporation
An individual designated to sign the articles of incorporation/bylaws on behalf of an incorporator, which is not a natural person, must also indicate?
The corporate or partnership name of the entity being represented and for whom he/she is executing the articles of incorporation/bylaws.
Under Designation of incorporators as directors
What is the requirement for an individual who signs the articles of incorporation on behalf of an incorporator, which is not a natural person?
May not be named as a director or trustee in the same articles of incorporation
Unless the said individual is also the owner of at least one (1) share of stock, or is also a member, of the corporation being formed.
Under Foreign nationals in the articles of incorporation
The inclusion of foreign nationals in the articles of incorporation shall be subject to the applicable constitutional, statutory and regulatory restrictions, as well as conditions, with respect to foreign participation in certain investment areas or activities.
True or False?
True
What are the Additional requirements for certain corporations?
No articles of incorporation shall be approved in the ff:
- banks
- banking and quasi-banking institutions
- preneed
- insurance and trust companies
- nonstock savings and loan associations (NSSLAs)
- pawnshops,
- other financial intermediaries
Unless accompanied by a favorable recommendation of the appropriate government agency to the effect that the articles of incorporation are in accordance with law.
What is the general rule as to the life of a corporation?
The corporation have a Perpetual existence (will not last)
What is the exemption to the general rule as to the life of a corporation?
Its articles of incorporation provide for a specific corporate term.
- Incorporators agreed to a fix term
ABC Corporation is already in existence in 2018 and they already issued the Certificate of Corporation in the year 2018 prior to the effectivity of the revised corporation code. The life of the Corp written in the certificate is only 30 years (prior to RCC, the corp limit is 50 years).
In RCC, the life of ABC’s Corporation will be PERPETUAL
True or False?
True
ABC Corporation is already in existence in 2018 and they already issued the Certificate of Corporation in the year 2018 prior to the effectivity of the revised corporation code. The life of the Corp written in the certificate is only 30 years (prior to RCC, the corp limit is 50 years). In RCC, the life of ABC’s Corporation will be PERPETUAL
If the stockholders would want to retain the original corporate term, they should notify the SEC
True or False?
True
ABC Corporation is already in existence in 2018 and they already issued the Certificate of Corporation in the year 2018 prior to the effectivity of the revised corporation code. The life of the Corp written in the certificate is only 30 years (prior to RCC, the corp limit is 50 years). In RCC, the life of ABC’s Corporation will be PERPETUAL
If the stockholders would want to retain the original corporate term, they should notify the SEC.
What is the requirement?
Required: Vote of stockholders representing the majority interest (notifying SEC)
What happens to the stockholders who vote against it?
They will have Appraisal Right
This right is when dissenting stockholder can demand for the payment of the fair value of his share/s
Appraisal Right
Can you still change the corporate term?
- Yes
- By amending the Articles of Incorporation
Can you extend the corporate term? (Ex:Orig is 30 years - New Amendment is 50 years)
Yes
How to extend the corporate term? (Ex:Orig is 30 years - New Amendment is 50 years)
First, make sure that the extension should not be made not earlier than 3 years prior to the expiration
When will the renewal take effect?
The day after the expiration
What if the corporate term has expired and the corporation failed to renew the term prior to expiration. Can they still ask for renewal of their corporate existence?
Yes, the corporation may apply for revival of corporate existence
If the corporate term has expired and the corporation failed to renew the term prior to expiration. If they ask for renewal of their corporate existence, what is their remedy?
File for Application of Revival
- They will have the same rights and privileges as they had prior to the expiration of the corporate term
- They will also be subject to all duties, debts and liabilities that were existing prior to its revival
- When SEC approved the application, they will issue a ‘Certificate of Revival of Corporate Existence’
- The Corp can now have Perpetual Existence UNLESS their application for revival, the corporation has indicated specific term
Certain Corporations may require favorable recommendation for revival by appropriate government agencies
True or False?
True
How about expired corporations whose certificate of incorporation have been revoked by the SEC due to non-filing of reports, can they still apply for revival of corporate existence?
- Yes
- They can still file
- But FIRST: they will have to file a ‘Petition to Lift Revoked Status’
How about expired corporations whose certificates of registration have been suspended by the SEC, can they still file an application for revival?
Yes
- They can still file
- But FIRST: they will have to file a ‘Petition to Lift Revoked Status’
How about an expired corporation whose name has been validly reused by another corporation, can they still file for an application for revival?
- Yes
- but FIRST; they must change their name within 30 days from the issuance of the certificate of revival of corporate existence
Who are those corporations who cannot apply for revival of corporate existence?
(1) Expired corporations who have completed the liquidation of their assets
Because they have already completed the liquidation
(2) Expired corporations whose certification of registration have been revoked on grounds other than non-filing of reports
What is called on the amount indicated in the Articles of Incorporation and this is the amount representing capital that may be paid for or subscribed by stockholders of the corporation.
Capital Stock (Authorized Capital Stock)
If capital stocks is divided in units, what is it called?
Collective sense
What is called in the units of capital stock?
Shares of Stock
Is there a minimum capital stock required by law?
No
There are no minimum capital stock required by law except?
Those that are vested in public interest and Protections from depositors and creditors
(1) Commercial Banks
(2) Investment Houses
(3) Insurance Companies
Is there are filipino percentage of ownership requirement?
Yes
These corporations have at least what percent of voting stock?
Exploration, development, utilization of natural resources
- Public service corporation
- Educational Corporation
- Coastwise Shipping
60%
This corporation have at least what percent of voting stock?
Mass Media
100%
These corporation have at least what percent of voting stock?
- Advertising Corporation
- Pawnshop Business
At least 70%
This corporation have at least what percent of voting stock?
Banking Corporation
60%
Foreign banking corporations can enter into the PH, but they have to follow the guidelines of Bangko Sentral ng Pilipinas (BSP)
True or False?
True
These corporation have at least what percent of voting stock?
- Retail trade with a capital of less than 2.5M USD must be wholly owned by Filipinos
- Private detective, watchman, security
At least 100%
This corporation have at least what percent of voting stock?
Rural banks
At least 40%
This corporation have at least what percent of voting stock?
Recruitment & Placement
At least 75%
A document prepared by the incorporators and filed with SEC
The Articles of Incorporation
What should be contained in the Articles of Incorporation?
(1) The Name of the Corporation
(2) Purposes
(3) Principal Place of Business
(4) Perpetual Existence
(5) Names, nationalities residence addresses of incorporators
(6) Number of directors/trustees
(7) Authorized Capital Stock
Contained in the Articles of Incorporation as to Purposes
- limit the powers of corp
- If acted beyond the purpose is considered as Ultra Vires (beyond the powers of corporation)
- must be lawful
- stated clearly
Contained in the Articles of Incorporation as to Principal Place of business
Refers to the place where the books of the corporation are kept or where the officers meet for the purpose of managing the affairs of the corporation
Contained in the Articles of Incorporation as to Perpetual Existence
If not elected, state the number of years where the corporation will exist
Contained in the Articles of Incorporation as to Names, nationalities residence addresses of incorporators
Because there are corporations who follow certain percentages of filipinos
Contained in the Articles of Incorporation as to Number of directors/trustees
- Stock Corporation (directors)
should not be MORE THAN 15 - Non-Stock Corporation (trustees)
may be MORE THAN 15
Should also state the names, nationalities, residence addresses of directors/trustees
Note: Incorporators are different, the maximum is 15
Contained in the Articles of Incorporation as to Authorized Capital Stock
- Stock Corporation
Amount of Authorized Capital Stock
No. of shares of stocks that capital stock is divided into
Par Value of each share
Original subscribers and how much they have subscribed and paid for
Note: If there are no par value shares, that fact must be stated in the Articles of Incorporation
- Non Stock Corporation
Amount of Capital
The names, nationalities, residence addresses of the contributors
How much they have contributed
Can there be any matters that the corporation may add in the AOI?
- Yes
- Any other term or matter may be added in the AOI so long as it is in accordance with law
It also defines the contractual relations between the corporation and the state, between stockholders and the state, and between the corporation and th stockholders, between and among the stockholders
AOI is the CHARTER/ LAW of the Corp
Note: SUBSTANTIAL COMPLIANCE is enough
