Powers

Question 1

Enumerate the powers that a Shareholder can apply his/her Appraisal right

Answer 1

1. Amendment to the Articles of Incorporation
2. Sale, Lease, Exchange, Transfer, or Disposition of All or Substantially All Corporate Assets (not aligned with purpose)
3. Merger or Consolidation
4. Investment of Corporate Funds in Another Business or Purpose
5. Extension or Shortening of Corporate Term
6. Increasing bonded indebtedness
7. Denial of pre-emptive right
8. Etc.

Question 2

How may the Capital Stock be decreaesd?

Answer 2

Capital stock may be decreased by
decreasing the number of the authorized
shares or by decreasing the par value of
the authorized shares, or both

Question 3

When is the increase and decrease of capital stock effective?

Answer 3

At the time of approval of the SEC and its
issuances of a certificate of filing of increase or decrease of capital stock

Question 4

The borrowing of corporation which is long term in nature involving large number of
lenders and secured by the encumbrance on corporate assets.

Answer 4

Bonded Indebtedness

Question 5

True or False: Bonded Indebtedness is different from issuing bonds to increase capital

Answer 5

True (Bonded Indebtedness are long-term and are secured by CORPORATE ASSETS)

Question 6

True or False: Bonded Indebtedness requires majority of BOD and SH representing 2/3 OCS approval

Answer 6

True (while normal bonds only require majority of BOD)

Question 7

What are the three main classifications of corporate powers?

Answer 7

Express
Implied
Incidental

Question 8

It states that a corporation hold the powers which are not prohibited or withheld from it by general laws

Answer 8

Theory of General Capacity

Question 9

Enumerate the 11 general powers stated in the RCCP (DO NOT ANSWER)

Answer 9

1. To sue and be sued in its corporate name
2. To have perpetual existence
3. To adopt and use a corporate seal
4. To amend its articles of incorporation
5. To adopt bylaws
6. To issue or sell stocks to subscribers and to sell treasury stocks/ accept members in case of NSC
7. To deal with Properties
8. To enter into a partnership, joint venture, and merger or consolidation
9. To make reasonable donations
10. To establish pension, retirement, and other benefits for its stakeholders
11. To exercise such other powers as may be
    essential or necessary to carry out its purpose or purposes as stated in the articles of incorporation

Question 10

True or False: A corporation can authorize a representative when it is sued

Answer 10

True

Question 11

An action filed by a minority SH in
the name and on behalf of the corp
to enforce a corporate right or
cause of action against the
directors or officers who
committed a wrongful act
against the corporation.

Answer 11

Derivative Suit

Question 12

True or False: All amendments on the AOI requires approval of a majority of the BOD and a vote of SH representing 2/3 OCS

Answer 12

True

Question 13

True or False: The corporation must submit both the old AOI and new AOI to amend

Answer 13

True

Question 14

True or False: The amended AOI must be certified by the corporate secretary and majority of the BOD that the required votes was achieved

Answer 14

True

Question 15

What are the requisites before a derivative suit can prosper?

Answer 15

1. Exhaust all other remedies first
2. Must have no appraisal right on the corproate act in the suit
3. Must be in good faith
4. Must be a stockholder at the time of the said act and at the filing of the suit

Question 16

What are the 2 kinds of encumbrances of corporate assets?

Answer 16

1. Disposition of any of corporation’s property and assets in the ordinary course
   business (Majority of BOD)
2. Disposition of all or substantially all properties of the corporation (Majority of BOD + 2/3 OCS)

Question 17

True or False: The 25/25 rule applies when increasing the authorized capital stock

Answer 17

True (While the incorporation 25/25 is removed, the rules for increase is still the same)

Question 18

True or False: Corporations vested with public interest must obtain a favorable recommendation from the related government agency first before they can amend

Answer 18

True

Question 19

What is the voting requirement for dealing with properties in accordance with SECONDARY or OTHER purpose?

Answer 19

Majority of BOD and shareholders representing 2/3 OCS

Question 20

What is the voting requirement for dealing with properties in accordance with PRIMARY purpose?

Answer 20

Majority of BOD

Question 21

True or False: Delegated Officers can sell or deal with corporate property

Answer 21

True

Question 22

What is the constitutional limitation for leasing of land in a corporation?

Answer 22

Lease with a maximum of 25 years and only up to 1,000 hectares of land

Question 23

True or False: A corporation can donate assets that they are using in the business

Answer 23

False (A donation must be reasonable and with valid purpose)

Question 24

True or False: Foreign corporations can donate in aid of a political party, candidate, or partisan political activity

Answer 24

False (it is unlawful thru the Omnibus Election Code)

Question 25

True or False: The donations of domestic corporations must be declared in the candidate's statement of campaign expenses

Answer 25

True

Question 26

This theory states that a corporation cannot exercise powers except those expressly or impliedly given to it.

Answer 26

Theory of Specific Capacity

Question 27

True or False: Gratuity pay cannot be sourced from the corporation's capital

Answer 27

True (Must be in URE)

Question 28

True or False: A corporation can deny the pre-emptive right of the Shareholders

Answer 28

True

Question 29

True or False: Generally, if one corporation sells or otherwise transfers all of its assets to another corporation, the latter is not liable for the debts and liabilities of the transferror

Answer 29

True

Question 30

What are the approval requirements for Cash dividends?

Answer 30

It must be approved by majority of the BOD.

Question 31

What are the required approval for stock dividends?

Answer 31

BOD majority and approval of SH representing 2/3 OCS

Question 32

True or False: Declaration of dividends is mandatory if the surplus profit is in excess of 100% of its Paid-up Capital

Answer 32

True

Question 33

What are the instances wherein dividends are not required to be given even if they meet the excess 100% of paid-up capital threshold?

Answer 33

Corporate Expansion Prohibited by Creditors Reserved for contigencies

Question 34

Any dividends other than from the unissued shares of the corporation

Answer 34

Cash Dividends

Question 35

Dividends that are declared and paid out of the unissued shares of the corporation

Answer 35

Stock Dividends

Question 36

True or False: Treasury Shares can be given as Property Dividends

Answer 36

True (but must have URE and only up to the amount of treasury shares)

Question 37

A management contract cannot exceed for a single term of?

Answer 37

5 years

Question 38

True or False: If more than 1/3 of the managing corporation’s voting stock is owned or controlled by the same interest in both managing and managed corporations, or a majority of directors are the same in both corporations, then the contract must be approved by at least 2/3 of the outstanding capital stock of the managed corporation

Answer 38

True