Miscellaneous (Midterm) Flashcards
Who are those liable directors, trusteed, or officers?
Those who
1. willfully vote for or assent to patently unlawful acts of the corporation
2. are guilty of gross negligence or bad faith in directing the affairs of the corporation
3. acquire any personal or pecuniary interest in conflict with their duty as such directors
What are the circumstances that warrant disregard of a separate personality?
- willfully vote for or assent to patently unlawful acts of the corporation
- are guilty of gross negligence or bad faith in directing the affairs of the corporation
- acquire any personal or pecuniary interest in conflict with their duty as such directors
- has consented to the issuance of watered down shares
- director has agreed contractually to hold himself personally and solidarily liable with the corporation
- the director was made personally liable by law
What are the requisites before a director or officer may be held personally liable for corporate obligation?
- the complainant must allege in the complaint that the director or officer assented to patently unlawful acts of the corporation
- the complainant must clearly and convincingly prove such unlawful acts
Are directors or officers who committed errors in business judgment amounting to bad faith or negligence be held liable?
No. They must have acted in bad faith (not more negligence or bad judgment)
What is the status of contracts on dealings of directors, trustees or officers with the corporation?
Voidable (valid until annulled) at the option of the corporation
Along with the director, officer, or trustee, who are those along with them that when contracts with the corporation, results to voidable contracts?
Their spouses
relatives within the fourth civil degree of consanguinity
The GR is that contracts on dealings of directors, trustees or officers with the corporation are voidable. What are the exceptions?
- presence of such director was not necessary to constitute quorum for that meeting
- his vote was not necessary to the approval of the contract
- the contract is fair and reasonable
- in corporations vested with public interest, the contract was approved by 2/3 of members of the board and at least a majority of the independent directors vote
- the contract was authorized by the BOD
This is a director or his spouse or relative within the 4th civil degree of consanguinity who contracts with the corporation where he is a director in.
Self dealing director
Are all director’s contract with his corporation void or voidable?
No. Some may be ratified by the stockholders provided a full disclosure of his adverse interests
These are the members of the board of directors in a certain corporation who are also directors in another corporation.
Interlocking directors
What is the status of the contract between two or more corporations having interlocking directors?
Valid as long as the contract is fair and reasonable and is free from fraud
What is the status of the contract between two or more corporations having interlocking directors where the interest of a director is substantial in one corporation and nominal in the other?
Voidable
What is the approval or ratification needed for an act of a director violating the doctrine of corporate opportunity?
SH representing 2/3 of OCS
Which activities cannot be done by the executive committee?
- approval for any action for which SH’s approval is also required
- filling of vacancies in the board
- amendment or adoption of bylaws
- amendment of any resolution of the board that are not amendable
- distribution of cash dividends
This is a body created by the by-laws and composed of not less than three members of the board which, subject to the statutory limitations, has all the authority of the BOD to the extent provided in the bylaws.
Executive Committee
What is the quorum required of the executive committee?
Majority vote of all its members
