Sec 35 to 44 Flashcards
A corporation has no power except those
expressly conferred on it by the corporation code and those that are implied or incidental to its existence
A corporation exercises their powers through its
board of directors and/or its duly authorized officers and agents, except in instances where the corporation code requires stockholders approval for certain specific acts
Sec. 35 of the corporation code enumerates the
general powers of a corporation which are exercised by the BOD or its duly authorized officers and agents
is an action brough by the stockholder on behalf of the corporation to enforce corporate rights against the corporation’s directors, officers, or other insiders
Derivative suit
What are the requirements in extending or shortening corporate term
- Majority of BOD/trustees
- 2/3 of OCS or members
In case of extension of corporate term, any stockholder may exercise his
appraisal right (for dissenting stockholder)
Requirements to Increase or Decrease capital stock
- Written notice for the meeting for the purpose, addressed at the residence of the stockholder listed at the books of the corporation, mailed personally or digitally as long as it is valid in the by laws or commission rules
- No decrease in capital stock shall be approved if it will prejudice the rights of corporate creditors
- Approval by majority of BOD
- Ratification of 2/3 of OCS
- Certificate signed by majority of directors and countersigned by chairperson and secretary of the stockholder’s meeting
- Approval thereof by the SEC
- Treasurer’s affidavit showing that 25% in the increase has been subscribed, and that 25% in the subscribed has been paid
It is a long-term indebtedness secured usually by real property
Bonded Indebtedness
Bonds issued by the corporation shall be
registered with the SEC, which shall have the authority to determine the sufficiency of the terms thereof
When is pre-emptive right not available
- Shares to be issued is in compliance with laws requiring stock offerings or minimum stock ownership by the public; and
- Shares to be issued in good faith with the approval of the stockholders representing 2/3 of the OCS, in exchange for property needed for corporate purposes or in payment of a previously contracted debt
Requirements for sale or disposition of substantially all assets of the corporation
- Written notice for the meeting for the purpose
- Majority of the BOD
- 2/3 of the OCS
- Any dissenting stockholder may exercise his appraisal right
Is SEC approval required for sale of substantially all assets of the corporation?
No, it is not required
When is ratification not required in sale or disposition of substantially all the assets of the corporation
- If the same is necessary in the usual and regular course of the business of the said corporation; or
- If the proceeds of the sale or other disposition of such property and assets be appropriated for the conduct of its remaining business
The general rule is the corporation may only acquire its own stocks in the presence of
unrestricted retained earnings
Exceptions when a corporation may acquire its own share even without URE
- Redeemable shares may be acquired without surplus profit for as long as it will not result into the insolvency of the corporation; and
- In a close corporation
The requirement of URE to cover the share is based on what?
Trust Fund Doctrine
Requisites in power to investing corporate funds in another corporation or business when it is to accomplish the primary purpose
- Approval of majority of BOD/T
- Stockholders not necessary
Requisites in power to investing corporate funds in another corporation or business when it is to accomplish a purpose other than the primary purpose
- Approval of majority of BOD/T
- Ratification by 2/3 of OCS or members
- Written notice for the meeting duly called for the purpose
- Stockholder can exercise appraisal right
- Ratification must be made at the meeting duly called for the purpose
The term funds include
any corporate property to be used in the furtherance of the business
Requirements for declaration of dividends
- Existence of URE
- Resolution of the BOD
- For stock dividends, additional requirements are:
- vote representing not less than 2/3 of OCS
- corporation must have also sufficient number of authorized unissued shares for distribution to stockholders
GR: Stock corporations are prohibited from retaining surplus profits in excess of 100% of their paid in capital stock, except when
- When justified by definite corporate expansion projects
- Prohibited by creditor through a loan agreement
- Retention is necessary for special circumstances, contingencies
Requirements for entering into a management contract
- Approval of majority of BOD
- Ratification of majority of stockholders
- Approval of 2/3 of the OCS of the managed corporation or 2/3 of the members in case of interlocking directors or interlocking shareholders where the stockholder control more than 1/3 of the total OCS entitled to the managing corporation
- No management contract may be entered into for a period longer than five years for any one term
refers to an act outside or beyond corporate powers, including those that may ostensibly be within such powers but are, by general or special laws, prohibited or declared illegal
Ultra Vires Acts
