Law on Corp - NonStock Corporation Flashcards
One where no part of its income is distributable to its members, trustees, or officers.
Non-Stock Corporations
What are the purposes of Non-Stock Corporations?
Allowable purposes
- Formed for;
> Charitable
> Religious
> Educational
> Professional
> Cultural
> Fraternal
> Literary
> Scientific
> Social
> Civic Service
> Similar purposes like trade, industry, agricultural and like chambers, or any combination thereof
What are the powers to Make Profits and Engage in Business?
A. Non-Profit character of NSC
B. Incidental Profits obtained from operations
C. Profits obtained from investment of accumulated funds
D. Prohibitions against distribution of dividends
A NSC cannot engage in business with the object of making profits
True or False?
True
What is the general rule on Incidental Profits obtained from operations?
Not empowered to engage in business with the object of making income or profits directly or indirectly
What is the exception in the general rule on Incidental Profits obtained from operations?
It is not prohibited to make income or profits as an incident to its operation
> any profit derived by it from any authorized activity cannot be distributed as dividends to its members
will only be used for furtherance of the purposes for which the corporation was organized
NSC may not lawfully engage in any business activity for profit as it would run counter to its very nature as a non-profit entity unless it is necessary to carry out the purpose for which it was organized. However, it may invest its accumulated funds for profit purposes.
True or False?
True
No part of NSC’s income is distributable as dividends to its members
True or False?
True
No pecuniary benefits shall inure in favor of the members although they may avail of, or derive other forms of, assistance from the corp
True or False?
True
Under Right to Vote in Non-Stock Corporations
The right to vote of members of any class or classes may be limited, broadened, or, even denied in the articles of incorporation or the by-laws. Unless so limited, broadened, or denied, each member, regardless of class, shall be entitled to one vote
True or False?
True
Under Right to Vote in Non-Stock Corporations
Unless otherwise provided by the articles of incorporation or the by-laws, a member may vote by proxy in accordance with the provisions of the RCCP
True or False?
True
Under Right to Vote in Non-Stock Corporations
Each member shall be entitled only to one vote per candidate in the election of trustees unless cumulative voting is authorized in the articles of incorporation or the by-laws.
He may cast as many votes as there are trustees to be elected but may not cast more than one vote for one candidate.
True or False?
True
Under Right to Vote in Non-Stock Corporations
Each member shall be entitled only to one vote per candidate in the election of trustees unless cumulative voting is authorized in the articles of incorporation or the by-laws.
The by-laws may likewise authorize voting through remote communication and/or in absentia
True or False?
True
Under Membership in a NSC
In terms of nature of membership rights
In the absence of restrictions, it may act arbitrarily, and exclude any person as it may see fit and the courts have no power to interfere.
True or False?
True
Under Membership in a NSC
In terms of Manner or Mode of Acquisition of Membership
Membership in a non-stock corporation cannot be acquired except in the particular manner or mode of acquiring the same, as provided for in its valid by-laws. The manner of admitting new members to a non-stock corporation is governed by the by-laws and may not, therefore, be uniform in all corporations. Once adopted, such mode of admitting new members must be observed until a new procedure is adopted by the corporation through an amendment of the by-laws.
True or False?
True
Under Membership in a NSC
In terms of Qualifications for Membership
It is a matter of general knowledge that corporations may validly prescribe certain qualifications necessary for membership and the mode of procedure in which membership can be acquired.
True or False?
True
