MT Flashcards
when does doctrine of piercing the veil of corporate fiction?
in these instances
- defeats public convenience when corp used to **evade obligation
- fraud cases [or] when corp used to justify wrong, protect fraud, or defend crime
- Alter ego cases where corp is a mere alter ego of a person or adjunct to another corp.
3 tests to pierce corporate veil
- control
- fraud
- harm
Halley v. Printwell doctrine
- [fraud] corporate veil could be pierced when use to perpetrate fraud
- trust fund doctrine] capital, assets, and property of corp is a trust fund for creditors such that creditors can also go after unpaid subscriptions for the satisfaction of the obligation.
probative factors justifying piercing of corporate veil
- stock ownership is owned by one or common ownership
- keeping corporate books and records
- modus operandi of business is related to fraud
piercing veil
vs.
reverse piercing
reverse
- corp held liable for debt of a person behind corporation
Int. Academy of Management & Economics Incorp (IAME) v. Litton
- reverse piercing where atty hid his assets so they would not be attached
- can piercing apply to non-stock corps
A is incorporator & decides to sell his shares to his wife.
is wife a subscriber?
if it is already a secondary transfer, the wife who bought can no longer be considered a subscriber because a subscriber refers only to those original or unissued shares
can preferred share holders have a vote in the corp buying real property?
No, the general rule provides that holders of preference shares do not have voting rights
the exception provides is if it is the disposition of corporate property substantially all of it or all.
in the case, it refers to purchasing of real property which is not yet the corporate property and outside of the scope of disposition.
exc to exc - doctrine of equality of shares if AOI is silent on voting, then preferred shareholders can be considered
in practice, BOD conducts all business & control all properties. it would be a hassle to need vote of stockholders.
Bank A issued a NO PAR VALUE share for the stated value of 1peso per share.
SEC questions the issuance of Bank A of no par value. Is the SEC correct?
General Rule, No par value is discretionary on corporations.
Exc, par value is required for
- banks
- trusts
- insurance
- public utilities.
grounds when to reject AoI
- not substantially compliant to the Form
- purpose/s patently unconstitutional, illegal, immoral, or contrary to rules & regulation
- capital stock subscribed is false
- require % of Fil ownership is not complied
as SEC, what is proper action when you find a corp violating the coroporate name rule
- may summarily order a cease and desist
- require all corp to register new name
- shall cause removal of all visible signages bearing corp name
if corp violating name rule does not comply/ fail to what can the SEC do?
- may hold BoD, Offcrs in contempt
- may hold them administratively, civilly, criminally liable
- may hold them liable under other laws
- may revoke registration
what is doctrine of centralized corporate management
& its exceptions
- exercise of powers
- conduct of all business
- and control of all properties
are granted by the BoD
EXC
- Executive Committee created by the BoD
-
what is an independent sirector?
an independent contractor, provided in sec. 22 is:
a person who, apart from receiving fees and shareholdings from the corporation,
- is independent of management & free from any business or other relationship
- which could, or could reasonably be perceived to materially interfere with the exercise of independent judgment in carrying out the responsibilities as a director
a person shall be disqualified from being BOD when?
within 5 years prior election
- convicted by final judgment
- offense exceeding 6 years
- violating of RCC
- violating 8799
- adminstratively liable for any offense involving fraudulent acts
- foreign court for violation of similar acts above
rule on dealings of BoD
gen rule: voidable (valid until annulled)
except when all are complied with
- presence of that BoD not required to constitute quorom for meeting
- vote of that BoD not nvessary for approval of contract
- contract is fair & reasonable
- if [corps with public interest], material contracts approved by at least 2/3 of all BoD & MaJ of Independent directors
- if [officer], contract previously authorized by BoD
where any of the first 3 are absent, at leat 2/3 OCS to ratify
rule on interlocking directors
Gen Rule: contract bet. 2/> corporations having interlocking directors is valid when no
- fraud
- fair & reasonable contract
EXC: it is voidable when substantial and nominal interest by the interlocking director
EXC-EXC: in spite voidable, provided that the nominal complies with art. 31, then it is valid
EXC RATIFIED: in spite there being absence of compliance, at least vote of 2/3 of OCS for a meeting called for the same will ratify the contract
exectuive committee may act on their own by approriate vote except in the ff: ;casees
- acts requiring vote from others
- distribution of cash dividends
VOTING REQUIREMENT
A] Amendment of AoI
[B] Election of BoD
[C] Removal of BoD
[D] Vacancies of BoD
[E] Vacancy + remaining BoD no qurom + grave, substantial, irreparable damage
[A] - amendment of aoi
1. Maj BoD
2. at least 2/3 OCS/members for non stock
[B] - election of BoD
1. MaJ OCS
[C] - removal of BoD
1. at least 2/3 OCS
[D] - vacancies
1. at least Maj of BoD if forming quorom
[E] - no quorom + gsi
1. unanimous vote of remaining BoD
[F] per diem of BoD
[G] BoD > Corp w/ Public Interest > Material Contract
[H] where first 3 elements are absent in art. 31, contract by board can be ratified by what vote
[I] Executive Committee actions
[F] - per diem of BoD
1. Maj OCS
[G] - material contract
1. at least 2/3 of all BoD
2. MaJ of Independent Directors
[H] - ratifying vote
1. 2/3 OCS
[I] MaJ of all exec committees members
VOTING REQ powers of Corp
[J] extend corp term
[K] inc/dec cap. stck; ici BI
[L] deny preemptive right
[M] sale of property
[N] sale of all/substantially all
[O] - invest funds in another corp
[P] - enter management contract
[J] - corp term
1. MaJ BoD
2. ratified 2/3 OCS
3. amendment of AoI
[K] - inc/dec capital stck, incur create inc. bonded indebtedness
1. MaJ BoD
2. 2/3 OCS
[L] - deny preemptive
1. 2/3 OCS
[M] - sale of property
1. Maj BoD
[N] - sale of all/substantially all property
1. 2/3 OCS
[O] - invest in another corp
1. Maj BoD
2. ratified OCS
[P] - enter management contract
1. MaJ BoD
2. MaJ OCS
- adoption of bylaws
- amendments of bylaws
- MaJ of OCS
- Maj of BoD & Maj of OCS
remedy of SH if meeting is unjustly refused to be held and its consequence
- petition to SEC
- showing good cause
- order from sec directing petitoiner to call a meeting
- petitioner shall preside
XYZ Corporation scheduled its annual stockholders’ meeting, but due to an oversight, the meeting was improperly called—not all stockholders received notice. Is the meeting and its proceedings valid?
Provided that;
- not one SH at the beginning of the meeting he objects, &
- all SH were present
then despite the meeting improperly held or called, the proceedings & transactions thereof is valid (Sec. 50)
how to secure voting trusts (58)
VTA must be
- in writing
- notarized
- specify T&C
it shall be filed;
- in the corp, &
- SEC
otherwise, it is ineffective & unenforceable
Nell Doctrine?
GR: one corp sells/transfers all assets to another corp, latter corp is NOT LIABLE for debts & liabilities
XPNs:
- express/implied agreement
- transfer amounts to consolidation or merger
- purchasing corp merely a continuation of selling corp
- transfer was fraudulent to escape liability
