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Business Laws and Regulations > Sec 22 to 34 of RCC > Flashcards

Sec 22 to 34 of RCC Flashcards

1
Q

Sec. 22 Unless provided in this code, ___________________________ shall exercise the corporate powers, conduct all business, and control all properties of the corporation

A

The board of directors or trustees

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2
Q

Directors shall be elected for ________________ from among the holders of stocks registered in the corporation’s books

A

a term of one (1) YEAR

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3
Q

Trustees shall be elected for a term

A

not exceeding three (3) years from among the members of the corporation

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4
Q

Each director shall hold office until

A

the successor is elected and qualified

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5
Q

Director who ceases to own at least (1) share of stock or a trustee who ceases to be a member of the corporation shall

A

cease to be such a director or trustee

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6
Q

The board of the corporations vested with public interest shall have _____________

A

independent directors constituting at least twenty percent (20%) of such board:

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7
Q

Examples of corporations vested with public interest

A
  • Corporations covered by Section 17.2 of Republic Act No. 8799, otherwise known as the “The Securities Regulation Code”
  • Banks and quasi-banks, nonstock savings and loan associations, pawnshops, corporations engaged in money service business, preneed, trust, and insurance companies and other financial intermediaries and;
  • Other corporations engaged in businesses vested with public interest similar to the above, as may be determined by the commission, after taking account relevant factors which are germane to the objective ad purpose of requiring the election of an independent director, such as to the extent of minority ownership, type of financial products or securities issued or offered to investors, public interest involved in the nature of business operations, and other analogous factors
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8
Q

What are the requisites for a corporation to be under the Securities Regulation Coe

A

Corporation with an exchange or with assets of at least P50 million pesos, and having 200 or more holder of shares, each having at least 100 shares of a class of its equity shares

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9
Q

An independent director is a person who, apart from shareholdings and fees received from the corporation, is

A

independent of management and 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

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10
Q

What is a derivative suit?

A

In cases of mismanagement where the wrongful acts are committed by the directors or trustees themselves. A stockholder may sue on behalf of a corporation.

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11
Q

What is the authority of the board of directors or trustees?

A

It is restricted to the management of the regular business affairs of the corporation, unless more extensive power is expressly conferred

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12
Q

A corporation’s board of directors is understood to be that body which

A
  1. Exercises all powers provided for under the corporation code
  2. Conducts all business of the corporation
  3. Controls and holds all property of the corporation
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13
Q

Qualifications of a board of director/trustee

A
  1. For a stock corporation, ownership of at least share of capital stock in his won name. For a non-stock corporation, only members of the corporation can be elected
  2. The director or trustee must be capacitated
  3. The director or trustee must be of legal age
  4. Other qualifications as may be prescribed in the by-laws of the corporation
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14
Q

Section 23 - Except when the exclusive right is reserved for holders of founder shares under Section 7 of this code, each stockholder or member shall have

A

the right to nominate any director or trustee who possesses all of the qualifications and none of the disqualification set forth in this code

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15
Q

At all elections of directors or trustees, there must be present

A

majority of the outstanding capital stock or majority of the members entitled to vote, either in person or through a representative authorized to act by written proxy

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16
Q

A stockholder or member who participates through remote communication in absentia, shall be

A

deemed present for purposes of quorum

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17
Q

If no election is held, or the owners of majority of the outstanding capital stock or majority of the members entitled to vote are not present whether in person, by proxy, or through remote communication or not voting in absentia at the meeting, such meeting may be

A

adjourned and the corporation shall proceed in accordance with section 25 of this code

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18
Q

The president of a corporation must be

A
  1. A director
  2. A stockholder on record of at least one share
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19
Q

The secretary of a corporation must

A
  1. Must be a Filipino citizen
  2. Must be a resident of the PH
  3. May or may not be a director
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20
Q

Qualifications of a treasurer of a corporation

A
  1. May or may not be a director
  2. Need not be a Filipino citizen
  3. Must be a resident of the Philippines
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21
Q

Qualification for the compliance officer

A

If the corporation is vested with public interest

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22
Q

Qualifications for other officers

A

Qualification may be provided for in the by-laws

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23
Q

No one shall act as

A

president and secretary or as president and treasurer at the same time

23
Q

The non-holding of elections and the reasons therefor shall be

A

reported to the Commission within thirty days from the date of the scheduled election. The report shall specify a new date for the election, which shall not be later than sixty days from the scheduled date

24
Q

What is quorum?

A

A majority of the directors or trustees, shall constitute for the transaction of corporate business. Majority usually means 50% + 1, unless the AOI or the bylaws provide for a greater majority

25
Q

Sec 25. Within thirty days after the election of the directors, trustees and officers of the corporation, the secretary or any other officer of the corporation, shall

A

submit to the Commission, the names, nationalities, shareholdings, and residence address of the directors, trustees and officers elected

26
Q

If no new date has been designated, or if the rescheduled application is likewise not held, the Commission may, upon the application of a stockholder, member, director, or trustee, and after verification of the unjustified non-holding of the election, summarily order that

A

an election be held. The Commission shall have the power to issue such orders as may be appropriate, including orders directing the issuance of a notice stating the time and place of the election, designated presiding officer, and the record date or dates for the determination of stockholders or members entitled to vote

27
Q

Should a director, trustee, or officer die, resign or in any manner cease to hold office, the secretary, or the director, trustee or officer of the corporation shall,

A

within seven days from knowledge thereof, report in writing such fact to the Commission

28
Q

A person shall be disqualified from being a director, trustee, or officer of any corporation if, within five (5) years prior to the election or appointment as such, the person was:

A

a. Convicted by final judgment
(1) Of an offense punishable by imprisonment for a period exceeding six (6) years
(2) For violating this code; and
(3) For violating RA 899 known as the Securities Regulation Code
b. Found administratively liable for any offense involving fraudulent acts
c. By foreign court or equivalent foreign regulatory authority for acts, violations, or misconduct similar to those numerated in paragraphs (a) and (b) above.

29
Q

Sec 27. Any director or trustee of a corporation may be removed from office by a vote of the stockholders holding or representing at least

A

2/ 3 of the outstanding capital stock, or in a nonstock corporation 2/3 of members entitled to vote

30
Q

Requisites for removal

A
  1. The removal should take place at a regular or special meeting duly called for the purpose
  2. The director or trustee can only be removed by a vote representing at least 2/3
  3. There must be previous notice to stockholders or members of the corporation of the intention to propose such removal at the meeting
  4. The special meeting of the stockholders or members of the corporation for the purpose of removal must be called by the secretary on order of the president or on the written demand of the stockholders representing or holding at least a majority of the outstanding capital stock or a majority of the members entitled to vote
31
Q

Sec 28. Any vacancy occurring in the board of directors or trustees other than by removal or by expiration of term may be filled by the

A

vote of at least majority of the remaining directors or trustees, if still constituting a quorum; otherwise, said vacancies must be filled by the stockholders or members in a regular or special meeting called for that purpose

32
Q

When the vacancy is due to term expiration, the election shall be held

A

no later than the day of such expiration at a meeting called for that purpose

33
Q

When the vacancy arises as a result of removal by the stockholders or members, the election may be

A

held on the same day of the meeting authorizing the removal and this fact must be so stated in the agenda and notice of said meeting

34
Q

Other causes of vacancy, the election must be held

A

no later than 45 days from the time the vacancy arose

35
Q

When the vacancy prevents the remaining directors from constituting a quorum and emergency action is required to prevent grave, substantial, and irreparable loss or damage to the corporation, the vacancy may be

A

temporary filled from among the officers of the corporation by unanimous vote of the remaining directors or trustees. Their actions shall be limited to the emergency action necessary, the term shall cease within a reasonable time from the termination of emergency or upon election of replacement director or trustee, whichever comes earlier. The corporation must notify the Commission, within 3 days from the creation of the emergency board, stating therein the reason for its creation

36
Q

Sec 29. GR: Directors or Trustees shall not receive any compensation, as such directors or trustees, except for reasonable per diems
Exception:

A
  1. When it is fixed by the corporation by laws
  2. When the stockholders, representing at least a majority of the outstanding capital stock, or majority of the members, vote to grant the same
37
Q

The provision on compensation of directors does not include

A

corporate officers who are not directors

38
Q

The rule on compensation of directors is founded upon

A

a presumption that directors/trustees render service gratuitously

39
Q

Limitation on compensation of directors

A

In no case shall the total yearly compensation of directors, as such directors, exceed 10% of the net income before income tax of the corporation during the preceding year

40
Q

Sec. 30 Directors who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors or trustees shall be

A

liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons

41
Q

A Director, Trustee or Officer shall not attempt to acquire, o acquire any interest adverse to the corporation in respect of any matter which has been reposed in them in confidence, and upon which, equity imposes a disability upon themselves to deal in their own behalf; otherwise, the said director, trustee or officer shall be

A

liable as a trustee for the corporation and must account for the profits which otherwise would have accrued to the corporation

42
Q

What is Doctrine of Corporate Opportunity?

A

limits the ability of those who owe a fiduciary duty to a corporation to take advantage of business opportunities that might otherwise be available to them in the absence of the fiduciary relationship. In Sec 30 of the RCC, this is done by holding directors personally liable when found guilty of gross negligence or bad faith in directing the affairs of the corporation, which results in damage or injury to the corporation, its stockholders or members, and other persons

43
Q

Before a director or officer of a corporation can be held personally liable for corporate obligations, the following requisites must concur:

A
  1. The complainant must allege in the complaint that the director or officer assented to patently unlawful acts of the corporation, or that the officer was guilty of gross negligence or bad faith; and
  2. The complainant must clearly and convincingly prove such unlawful acts, negligence or bad faith
44
Q

If the cause of the losses is merely error in business judgment, not amounting to bad faith or negligence,

A

directors and/or officers are not liable

45
Q

Sec. 31 GR: A contract of the corporation with one or more of its directors or trustees, officers, or their spouses and relatives within the fourth civil degree of consanguinity or affinity is voidable, at the option of such corporation, except when:

A
  1. That the presence of such director or trustee in the board meeting in which the contract was approved was not necessary to constitute a quorum for such meeting;
  2. That the vote of such director or trustee was not necessary for the approval of the contract
  3. That the contract is fair and reasonable under the circumstances;
  4. In case of corporations vested with public interest, material contracts are approved by at least 2/3 of the entire membership of the board, with at least a majority of the independent directors voting to approve the material contract
  5. That in case if an officer, the contract has been previously authorized by the BOD
46
Q

A contract of the corporation with directors or trustees or officers may be ratified by the vote of the stockholders representing at least

A

2/3 of the members in a meting called for the purpose. The requisites are:
1. Any of the first three conditions set forth in the 1st paragraph of the above section is absent
2. Full disclosure of the adverse interest of the directors or trustees involved is made at such meeting; and
3.That the contract is fair and reasonable under the circumstances

47
Q

Sec. 32 GR: A contract between two or more corporations having interlocking directors shall not be invalidated on that ground alone. Requisites:

A
  1. The contract is not fraudulent
  2. The contract is fair and reasonable under the circumstances
48
Q

GR: A contract between two or more corporations having interlocking directors shall not be invalidated on that ground alone. Exemption:

A

If the interest of the interlocking director in one corporation is substantial and his interest in the other corporation or other corporations is merely nominal, he shall be subject to the provisions of Section 31 insofar as the later corporation or corporations are concerned

49
Q

What is substantial interest?

A

Stockholdings exceeding 20% of the outstanding capital stock shall be considered substantial for purposes of interlocking directors

50
Q

Sec. 33 Where a director, by virtue of such office, acquires a business opportunity which should belong to the corporation, thereby obtaining profits to the prejudice of such corporation, the director must

A

account for and refund to the latter all such profits, unless the act has been ratified by a vote of the stockholders owning or representing at least 2/3 of the outstanding capital stock. This provision shall be applicable, notwithstanding the fact that the director risked one’s own funds in the venture

51
Q

Sec. 34 If the bylaws so provide, the board may create an ____________________ composed of at least 3 directors.

A

Executive Committee

52
Q

Executive committee may act, by ____________________, on such specific matters within the competence of the board, as may be delegated to it in the bylaws or by majority vote of the board

A

Majority vote of all of its members

53
Q

Limitations on the powers of the executive committee

A
  1. Approval of any action for which shareholders approval is also required
  2. Filing of vacancies in the board
  3. Amendment or repeal of by-laws or the adoption of new by-laws
  4. Amendment or repeal of any resolution of the board which its by express terms is not amendable or repealable; and
  5. Distribution of cash dividends to shareholders
54
Q

Quorum required of the executive committee

A

The committee may act, by majority of all its members, on such specific matters within the competence of the board

Business Laws and Regulations (2 decks)

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