Title 14: Dissolution Flashcards
What is dissolution?
The extinguishment of the franchise of a corporation. It is the termination of its corporate existence.
What are the 2 modes of dissolution?
Voluntary
Involuntary
What are the 2 categories of voluntary dissolution?
Where creditors are affected
Where creditors are not affected
What are the ways in which voluntary dissolution occurs? (5)
- vote of BOD and resolutions adopted by SH (where no creditors are affected)
- judgment of SEC after petition
- shortening corporate term through amendment of AOI
- declaration of dissolution submitted to SEC
- merger or consolidation
What are the ways in which involuntary dissolution occurs? (6)
- expiration of corporate term
- by legislative enactment
- court dissolves the corporation
- failure to formally organize within 5 years from incorporation
- after 2 years of delinquent operation after subsequent inoperation for a period of 5 consecutive years
- by order of SEC
How is voluntary dissolution where no creditors are affected effected?
majority vote of BOD + resolution adopted by SHs by vote of SH owning at least majority of the OCS
How many days prior to the meeting for dissolution where no creditors are affected should notice be given to SH?
20 days
True or False: Only those entitled to vote are given the notice to the meeting for dissolution where no creditors are affected.
False. Even those not entitled to vote should be given notice.
How many times should the notice of the meeting for voluntary dissolution where no creditors are affected be published in the place where the principal office is located or in a newspaper of general circulation in the Philippines?
Once prior to meeting
The verified request for dissolution where no creditors are affected should include? (5)
- reason for dissolution
- details of the notice
- names of SH, directors who approved
- details of meeting
- details of publication
In a dissolution where no creditors are affected, what are the required submissions? (3)
- copy of resolution adopted
- proof of publication
- favorable recommendation
True or False: For dissolution where no creditors are affected, favorable recommendations are always necessary submissions to the SEC.
False. It is only required when necessary.
When does dissolution where no creditors are affected takes effect?
upon the issuance by the SEC of a certificate of dissolution
Within how many days from receipt of the verified request for dissolution where no creditors are affected, and in the absence of withdrawal within, the Commission shall approve the request.
15 days
Which corporations are required by the SEC to submit favorable recommendations of appropriate government agencies?
Financial intermediaries like banks and quasi-banks
What happens when the corporation who submitted a request for dissolution withdraws it?
An investigation on withdrawal of request of dissolution is made.
What happens after an investigation on withdrawal of request of dissolution? (3)
- a pronouncement is made
- a joint meeting is directed
- orders are issued as deemed appropriate
How is dissolution where creditors are affected effected?
by filing a verified petition to the SEC
In a dissolution where creditors are affected, the verified petition to be filed to the SEC should be? (3)
- signed by majority of BOD
- verified by president or secretary or any director
- affirmative vote of SH representing 2/3 of OCS at a meeting
In a dissolution where creditors are affected, the verified petition shall include? (3)
- the reason for dissolution
- details of notice
- details of meeting
What are the required submissions in a in a dissolution where creditors are affected? (2)
- copy of resolution
- list of all creditors
In a dissolution where creditors are affected, the SEC will fix a deadline for filing objections which is a period of how many days after the entry of the orderr?
Not less than 30 days nor more than 60 days (30-60 days)
In a dissolution where creditors are affected, how many times should the copy of the order be published in a newspaper of general circulation or in the city/municipality where the principal office is located?
Once a week for 3 consecutive weeks
In a dissolution where creditors are affected, the newspaper where the order is published should be posted how often in how many public places?
for 3 consecutive weeks in 3 public places
True or False: The amended AOT shortening the corporate term does not need to be submitted to the SEC.
False
When does a dissolution by shortening the corporate term take effect?
on the day following the last day of the corporate term as amended and approved by SEC
True or False: A corporation may propose a past date as an amended corporate term.
False. It must always be a future date, not an one that had already lapsed.
True or False: Mere filing of the amendment of the AOI to shorten corporate term is tantamount to actual dissolution.
False. The amended AOI must first be approved by SEC and dissolution may then validly take effect on the day following the last day of the amended corporate term
True or False: When a corporation is already placed in trusteeship or receivership, the BOD and SHs may still represent the corporation.
False. They may no longer represent the corporation.
Can the BOD pass a resolution extending the corporate life after dissolution?
No
True or False: The withdrawal for request for dissolution is to be made in writing.
True
Who must verify and sign the withdrawal of request for dissolution?
any incorporator, director, trustee, shareholder, member + signed by them
When should withdrawal be submitted?
No later than 15 days from the receipt by SEC of request for dissolution
True or False: A corporation may be dissolved motu proprio or upon filing of a verified complaint by any interested party.
True
When does involuntary dissolution by non-use of corporate charter take effect?
the day after the 5 year period
True or False: Involuntary dissolution through non-use of corporate charter takes effect automatically after the 5 year period.
True
In an involuntary dissolution by final judgment, what are the reasons that it may be effected?
- created for illegal purposes
- committed illegal practices and the SH knew of the same
- tolerate the commission of illegal practices of its directors/officers
In an involuntary dissolution by final judgment, what happens to the assets of the dissolved corporation?
after payment of its liabilities, it will be forfeited in favor of the national government
What is AMLA or RA 9160?
Anti Money Laundering Act of 2001
What is RA 3019?
Anti Graft and Corrupt Practices Act
How many years is a corporation given after its dissolution to liquidate or to wind up its affairs?
3 years
True or False: If the liquidation is done through its BOD, there is no need to effect quo warranto proceedings in involuntary dissolution.
True
What happens to assets distributable to creditors or SHs who is unknown or cannot be found?
These assets are escheated in favor of the national government
True or False: During liquidation, the corporation is still allowed to enter into new contracts as long as it is within the 3 year winding up period.
False. The corporation has been dissolved so it cannot anymore enter into new contracts.
Except what activity is a corporation now allowed to distribute any of its assets except upon dissolution?
Decrease of capital stock
What happens to uncollected credit, when the 3 year period for liquidation has already lapsed?
The corporation may appoint a trustee and the trustee will collect the debt for them.
