Private Corporation Flashcards
Attributes of a Private Corporation
- Artificial Being
- Created by Operation of Law
- Right of Succession
- Corporate Powers
Yes
Artificial Being
Doctrine of Separate Personality
(1) can possess properties
(2) can incur liability (limited liability rule)
(3) can sue and be sued
Yes
Artificial Being
Doctrine of Piercing the Corporate Veil
(1) fraud cases
(2) alter ego cases - invoke separate personality only when convenient
This is not automatic
- need magdemanda → court will determine if will pierce the corporate veil or not
Created by Operation of Law
Concession Theory
- Private Corporation → owes it existence to the state (RCC)
Can congress enact a law creating private corporation?
Can congress create a corporation?
- No (Since Private Corp → RCC)
- ✔ GOCC, ✘ Private Corporation
Right of Succession
Despite succession, corporation will not be dissolved.
Yes
Corporate Powers
Doctrine of Limited Capacity
- what is the difference between Express, Implied, Incidental?
If outside the 3 powers → Ultra Vires Act (not necessary illegal)
- Express → expressly stated in RCC, AOI
- Implied → necessary to exercise express powers
- Incidental → incidental to existence of corporation
Due to RCC (✘ in the old)
- Any Corporation → can enter into a partnership or JV
- Only Domestic Corporation → can donate for political purpose
Yes
Classes of Corporation
Stock vs Non Stock
- what is the distinction between them?
Stock
- can issue dividends
Non Stock
- cannot issue dividends
Classes of Corporation
Domestic vs Foreign
Close vs Open
De Jure vs De Facto
Domestic vs Foreign
- created under which law
Close vs Open
- open to…
De Jure vs De Facto
- De Jure → exist in law
Classes of Corporation
Ecclesiastical vs Lay
- what is the distinction between them?
Ecclesiastical
- for religious purpose
Lay
- not for religious purpose
(1) eleemosynary → for charity
(2) civil → for profit
Corporators vs Incorporators
Corporators
- Stock → stockholders
- Non Stock → members
Incorporators
- founders (original)
- mentioned and signatories of AOI
Yes
Kinds of Shares
Common vs Preferred
Preferred
- in distribution of asset (liquidation)
- in distribution of dividends
What are 2 facts to remember in case of preferred stocks?
- always par value shares (✘ non par)
- may be deprived of voting rights
Kinds of Shares
Voting vs Non Voting
- Exceptions where Non Voting can vote (I³ AM SAD)
- Incurring, creating, increasing bonded indebtedness
- Increase or decrease capital stock
- Investment of corporate fund on another corp or business
- Amendment of AOI
- Merger or Consolidation
- Sale or transfer of all or substantially all of corporate property
- Amendment or adoption of by-laws
- Dissolution
Kinds of Shares
Par vs Non Par
Par
- value → indicated in AOI
- issued only if → ≥ par value
Non Par
- value → not in AOI (but may be fixed by BOD)
- issued only if → ≥ P5
What is a watered stock? What is its effect?
Who cannot issue non par? (BITPBL)
Watered Stock
- par value shares issued less than par
- director / officers who consented → solidarily liable
Cannot Issue Non Par
- Banks
- Insurance Companies
- Trust Companies
- Public Utilities
- Building and Loan Association
Kinds of Shares
Founder’s Shares
- with certain rights and privileges
- must be stated in AOI (✘ by-laws)
- what is the exception when it comes to rights and privileges?
Have the exclusive right to vote or be voted for BOD
- max of 5 years from date of incorporation
- not violate anti dummy law and foreign investment act
Kinds of Shares
Redeemable vs Treasury
Redeemable
- can be redeemed upon expiration of fixed period
- What is the similarity with preferred stocks?
What type of share
- unrestricted RE is required
- if redeemed, deemed retired → cannot sell / dispose
- may be deprived of voting rights
- Treasury Share (Redeemable → unrestricted RE ✘)
- Redeeemable Share (Treasury → can sell / dispose)
