PART 2 EQUITY Flashcards
Types of corporation
Limited liability corporation
Close corporation
Public company or listed company
Stock corporation
De jure corporation
Stockholders are not personally liable for corporate obligations and cannot be held liable to third persons who have claims against the corporation beyond their agreed subscriptions or contribution to the corporate capital
Limited liability corporation
All the corporations issued stocks of all classes exclusive of treasury shares shall be held of record by not more than a specified number of persons not exceeding 20
Close corporation
Corporation shall be deemed not a closed corporation when at least how many of its voting stocks or voting rights is owned or controlled by another corporation which is not close corporation as defined
2/3
Close corporation shall not least in any stock exchange or make any public offering of any of its stock of any class
True
In close corporation all of the issued stocks of all classes shall be subject to one or more specified restrictions on transfer permitted by the corporation code
True
With a class of equity securities listed on any exchange OR
Public company or listed company
With assets in excess of 50 million and having 200 or more hoarders at least 200 of which are holding at least (100 shares of a class of its equity securities)
Public company or listed company
A company that is authorized to issues shares of stock to investors
Stock corporation
Shares of stock represent ownership interest in the corporation
Stock corporation
Stock corporations are regulated by the?
Securities and exchange commission
What are the formation of a corporation
Articles of incorporation
Bylaws
Certificates of incorporation or juridical personality commences
Powers of a corporation
A contract between the state and the corporation
Articles of incorporation
A contract between the stockholders members in case of non-sto corporation and the state
Articles of incorporation
A contract between a corporation and stockholders members
Articles of incorporation
The articles of incorporation do not become effective and binding as the charter of the corporation unless they have been filed and register with what commission?
Security and exchange commission
Articles of incorporation shall contain substantially the following matters
- name of the corporation
- names nationalities and residences of the incorporators
- number of the directors or trustees
- names nationalities and residences of the persons who shall act as a director’s or trustees until the first regular director or trust are duly elected and qualified in accordance with the corporation code
- specific purpose or purposes for which the corporation is being incorporated
- place where the principal office of the corporation is located which must be within the philippines
- term for which the corporation is to exist
- if it be stuck the amount of its capital stock in lawful money of the philippines and capital contribution if it’s non-stock corporation among others
This signifies the rules and regulation or private laws enacted by the corporation to regulate govern and control its own actions affairs and concerns and its stockholders or members and directors and officers with relation there to and among themselves in the relation to it
Articles of incorporation
Relatively permanent and continuing rules of action adopted by the corporation for its own government and that of the individuals composing it and having the direction in whole or in part in the management and control of its affairs in activities
Articles of incorporation
Adopted before or after incorporation
Bylaws
Bylaws
The rules of action adopted by a corporation for its internal government
Adopted before or after incorporation
Approved by the stockholders if adopted after incorporation
A condition subsequent in the acquisition by a corporation or a juridical personality
When to adopt bylaws
Within one month after receipt of the official notice of the issuance of the certificate of incorporation by the sec
Names mentioned in the articles of incorporation as originally forming the corporation and are signatories
Corporators
Stockholders
Members
Incorporators
Corporate doctrines
Doctrine of corporate entity
Doctrine of piercing the veil of corporate fiction
Right of succession
Ultra vires acts of a corporation
Doctrine of corporate opportunity
The principle on separate identity of a corporation from its stockholder. The stockholders or members of a corporation are not the same as the corporation itself and the property belonging to a corporation cannot be attached nor held answerable for the depth of the stockholders
Doctrine of corporate entity
The principle of separate identity of a corporation from its stockholders may be disregarded when it is used to defeat public convenience justify wrong protect or cover fraud or defend crime or work and injustice
Doctrine of piercing the corporate veil
Granted by law to a registered corporation means that a corporation has a continuity of corporate life during its term of existence stated in the articles of incorporation
Right of succession
No corporation under the corporation code shall possess or exercise any corporate powers except those conferred by the code or by its articles of incorporation and except such as are necessary or as incidental to the exercise of the powers as conferred
Ultra vires acts of a corporation
When a director attempts to acquire or acquires in violation of his duty any interest adverse to the corporation he acquires for himself a business opportunity which should belong to the corporation
Doctrine of corporate opportunity
This refers to the total amount of shares which a corporation is allowed to issue if the shares have a par value.
Authorized Capital stock
This is the part of capital stock which is subscribed whether paid or unpaid
Subscribed capital stock
The part of the subscribed capital stock paid to the corporation
Paid up capital stock
That part of the capital stock which is not issued or subscribed
Unissued capital stock
This refers to the total shares of stock issued to subscribers or stockholders whether or not fully or partially paid except treasury shares
Outstanding capital stock
The term surplus is generally defined as the excess of the net assets of a corporation over its capital or stated capital
Paid in surplus
Under this doctrine the capital stock and assets of the corporation are held in trust for the creditors
Trust fund doctrine
A _______ is one of the units into which the capital stock of the corporation is divided
Shares of stock
Certificate is the written acknowledgement by the corporation of the stockholder’s interest in the corporation and its property
Stock certificate
Represents the intangible interest or right which an owner has in the management profits and assets of the corporation it is property subject to conversion
Shares of stock
Tangible personal property
Stock certificate
This may be issued even if not fully paid except shares without par value which are deemed fully paid and an accessible upon issuance
Shares of stock
As a rule this is issued only if the subscription is fully paid
Stock certificate
Classes of shares of stock under the corporation code
- Preferred stock
- Common stock
- No par value stock
- Redeemable shares
- Voting shares
- Non voting shares
- Founder shares
- Par value stock
The ordinary stock of a corporation which entitles the holder to a pro rata division of the dividends without any preference or advantage over any other stockholders.
Representation of partial ownership in a company and is the type of stock comes with voting rights.
Common stock
One which entitles the holder to certain preference over other shareholders
Have a higher claim on distributions for example dividends than common stockholders but less than bondholders
Preferred stock
Two types of preferred stock
Preferred stock as to asset
Preferred as to dividends
One which entitles the holder to preference in the distribution of dividends over common stock upon the liquidation of the corporation
Preferred stock as to asset
One that entitles the holder to preference in the distribution of dividends over common stock
Preferred as to dividends
One the nominal value of which appears on the articles of incorporation and on stocks certificate
Par value stock
Unadjusted value of an asset without taking into account deductions and premiums
Nominal value
One without any nominal or par value appearing in the articles of incorporation or on the stock certificate
No par value stock
Those which grant the issue incorporation the power redeem or purchase after a certain period
Redeemable shares
Those entitled to vote in the meetings of the corporation
Voting shares
Those without voting rights except in certain cases
Non voting shares
Those that grant to the founders certain rights and privileges not enjoyed by other shares
Founders’ shares
Those which have been issued and fully paid for but subsequently required by the issuing corporation by purchase redemption donation or through some other lawful means
Treasury shares
Rules of treasury sales
- No voting rights as long as they remain in the treasury
- Although they are part of the subscribe stock they are not considered outstanding shares
- Being owned by the corporation they are not entitled to dividends
- They may again be disposed of or a reasonable price fixed by the board of directors
Rules of founders shares
- Founders shares must be classified as such in the articles of incorporation
- They may be given rights and privileges not enjoyed by other shares
For stock corporations no share may be deprived of voting rights except those classified and issued as…
Preferred or redeemable shares
Each share of stock is entitled to vote unless denied in the articles of incorporation or declared delinquent under what section of the corporation code?
Section 67
Only stockholders of record as of date fixed in the _____ shall enjoy the rights to vote at stockholders meeting
Bylaws
This is the best evidence to establish the stockholders who are entitled to vote at stockholders meeting
The stock and transfer book
This is the stockholders most basic and fundamental right inherent in and incidental to the ownership of corporate shares of stock this right should not be denied on tenuous and shallow grounds
The right to vote
_______ is explicit that the moment a stock becomes delinquent the holder of losses his right to vote
Section 71 of the corporation code
Therefore no _____ for unpaid subscription shall be voted or entitled to vote or represented at any stockholders meeting.
Neither can he or she be voted for us director of the corporation nor continue sitting in the board if he has been previously elected as member thereof.
Delinquent stock
Delinquent stockholders can vote the shares covering the entire subscription stated in section 67 of the corporation code
False
The pledgor or mortgagor shall have the right to attend and vote at meetings of stockholders unless the pledgee or mortgagee is expressly given by the pledgor or mortgagor such right in writing which is recorded in the appropriate corporate books
True
On the death of a shareholder his_________ becomes vested with the legal title to his tax and entitled to vote the same at all meetings and that until a settlement and division of the state is done the legal title to the stocks of the deceased belongs to said ___________
Executor or administrator or receivers or other legal representative
Refers to the right granted to the stockholders to have the first option to subscribe to any issue once or disposition of shares from the capital stock in proportion to the respective shareholdings in the corporation
Preemptive right
In order to be valid and enforceable any restriction on the transfer of shares requiring the transferr to first offer the same to the existing stockholders before selling it to third parties must be explicitly provided for in the articles of incorporation and stock certificate
Right of first refusal
This right does not apply to transfer by donation
Right of first refusal
It is not an inherent right of a stockholder or a matter of absolute right otherwise a stockholder can easily withdraw from the corporation at any time he desires very turning his shares and getting back his capital
Appraisal right
As a remedy in case an appraisal right is not allowed a stockholder may avail what section of the corporation code allows transfer of ownership of shares
Section 63 of the corporation code
Appraisal right is allowed only under the instances provided in what corporation codes
Section 37 42 81 and 105
All stockholders whose name appear in the stock and transfer book of the corporation and date of the meeting authorizing the issuance of shares are entitled to…
Preemptive right under section 39 of the corporation code
Subscription deposits are not included in determining the proportionate right of the stockholders in the exercise of…
Preemptive right
Accumulated profits realized out of normal and continuous operation of the business it refers to the percentage of net earnings not paid out as dividends but retained by the company to be reinvested in its core business or to pay death
Retained earnings
Dividends must be declared and paid out of the ____ of the corporation
Unrestricted retained earnings
Retained earnings which are not appropriated for designated purposes such as expansion possible future loss and other contingencies or when prohibited under alone agreement are what are referred to as
Unrestricted retained earnings
The right to receive dividends is inherent in the ownership of shares hence are entitled to whom
Stockholders of record
A person who cannot be a recipient of a dividend
A person who is not a stockholder of record
For purposes of determining who are entitled to dividends is the future date specified in the resolution declaring dividends that the dividend shall be payable to the stockholders of records on a specified future date or as of the date of meeting declaring said dividend
A record date
What are the dividend features
- Guaranteed
- Cumulative
- Non-cumulative
- Participating
- Non-participating
- Cumulative participating
Entitled the holder thereof to payment of current dividend as well as dividends in arrears
Cumulative
Entitled the holder thereof only to the payment of current and not past dividends
Non cumulative
Entitle the holder thereof to participate with the holders of common shares after their preferred right has been satisfied
Participating
Entitled the holder of to payment of the stipulated prefer dividends and no more
Non-participating
Entitled the holder they’re off to payment of dividends in arrears and also after receiving his preferred share of dividends to participate with the holders of common stock in the remaining profits
Cumulative participating
The requirement of registration under subsection 8.8.1 shall not apply to the sale of any security
Section 10 exempt transactions
Votes required for the compensation of the board
Majority vote of the board and stockholders representing 2/3 of the outstanding capital
Votes required for amended articles of incorporation
Majority vote of the board and stockholders representing 2/3 of the outstanding capital
Votes required for amended ByLaws
Majority vote of the board and stockholders representing 2/3 of the outstanding capital
Votes required to remove a member of the board
stockholders representing 2/3 of the outstanding capital
