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BLR 221 > Title 4 > Flashcards

Title 4 Flashcards

1
Q

Can corporations be entitled to moral damages?

A

GR: No

XPTN: When their goodwill has been tarnished.

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2
Q

Incidental powers are conferred by reason of its?

A

Existence

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3
Q

Through which body does a corporation exercise its powers?

A

BOD

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4
Q

Can corporations make donations?

A

GR: No

XPTN: In pursuit of their CSR.

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5
Q

This is an action brought by a stockholder on behalf of the corporation to enforce corporate rights against the corporation’s directors, officers, or other insiders.

A

Derivative suit

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6
Q

Who has the right to decide whether the corporation should sue?

A

BOD

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7
Q

In a derivative suit, who is the real party in interest?

A

Corporation

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8
Q

In a derivative suit, who is the nominal party?

A

Stockholder

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9
Q

Can corporations be solidarity sued or be sued for torts?

A

Yes

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10
Q

Can corporations be liable for crimes.

A

No

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11
Q

Can foreign corporations without license to do business in the Philippines sue? Can it be sued?

A

No

Yes

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12
Q

Can a corporation be held civilly liable for a crime?

A

Yes

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13
Q

What is the approval need to extend or shorten corporate term?

A

rule of thumb

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14
Q

This means that a stockholder who dissented and voted against the proposed corporate action, may choose to get out of the corporation by demanding payment of the FMV of his shares.

A

Appraisal right

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15
Q

Can you acquire redeemable shares without unrestricted RE?

A

No

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16
Q

Can you acquire treasury shares without unrestricted RE?

A

Yes

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17
Q

Can the proceeds of sales of stocks be used to pay dividends?

A

No

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18
Q

A mail of notice was dropped off at a post office. The stockholder never claims that he never received such notice. Is the notice valid?

A

Yes. It is enough that the notice be deposited at a post office.

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19
Q

What is the approval need to increase or decrease capital stock?

A

rule of thumb

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20
Q

True or False: Any increase or decrease in the capital stock or the incurring, creating, or increasing of bonded indebtedness shall require prior approval of the Commission.

A

True

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21
Q

Where appropriate, the increase or decrease in the capital stock or the incurring, creating, or increasing of bonded indebtedness shall also require approval of?

A

Philippine Competition Commission

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22
Q

The application with the Commission for increase or decrease in the capital stock or the incurring, creating, or increasing of bonded indebtedness shall be made within how many months from the date of approval of the BOD?

A

6 months

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23
Q

Certificate of approval of the Commission to increase or decrease capital stock shall be attached where?

A

AOI

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24
Q

With what document does the Commission look for before filing any increase or decrease in capital stock?

A

Treasurer’s affidavit

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25
Q

A treasurer’s affidavit for increase or decrease in the capital stock shall show what?

A

that
1. at least 25% of the increase of capital stock has been subscribed; and

  1. at least 25% of amount subscribed has been paid to the corporation
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26
Q

When is decrease in capital stock be disapproved by the Commission?

A

If its effect shall prejudice the rights of corporate creditors.

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27
Q

Where should bonds issued by a corporation be registered with?

A

the Commission

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28
Q

This provides that subscriptions to the capital stock of a corporation constitute a fund which the creditors have a right to look for the satisfaction of their claims.

A

Trust Fund Doctrine

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29
Q

What are the only 3 instances where a corporation may distribute its corporate capital?

A
  1. amendment of AOI to reduce authorized capital stock
  2. purchase of redeemable shares by corporation
  3. dissolution and eventual liquidation
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30
Q

This is a long-term indebtedness secured usually by real property.

A

Bonded Indebtedness

31
Q

True or False: The requirements for the power to incur, create. or increase bonded indebtedness is also the same with the power to increase or decrease capital stock.

32
Q

Who enjoys preemptive right?

A

All stockholders

33
Q

Which may deny the right of preemption?

A

AOI or an amendment thereto

34
Q

When is preemptive right not applicable?

A
  1. the shares require ownership by the public or stock offerings
  2. the shares are issued in good faith in exchange for property
35
Q

This is the preferential right of all stockholders to subscribe to all issues or disposition of shares of any class, in proportion to their respective shareholdings.

A

Pre-emptive right

36
Q

True or False: Only those originally issued shares have the right to preemption.

A

False. Regardless whether it is an original issuance or not, all shareholders have preemptive right.

37
Q

What is the purpose of preemptive right?

A

To enable shareholder to retain his proportionate control in the corporation

38
Q

True or False: A suit to enforce preemptive rights in a corporation is a derivative suit.

39
Q

Who may acquire public domains?

A

Natural persons who are Filipino citizens

40
Q

Are foreign corporations allowed to buy real properties in the Philippines?

A

No. They may only lease for a maximum of 50 years.

41
Q

Natural persons who are Filipino citizens may acquire public domains through?

42
Q

What does “substantially all” mean?

A

If through the disposition of these assets, the purpose of the business would no longer be possibly accomplished.

43
Q

True or False: The approval of the SEC is required for the sale or disposition of all or substantially all of the assets of the corporation.

44
Q

Using what measurement should the sale involving all or substantially all of the corporation’s asset be measured?

A

Net asset value (shown in latest FS)

45
Q

When is ratification not required in the sale or disposition of assets?

A
  1. it is necessary in the regular course of business
  2. proceeds are appropriated for the conduct of remaining business
46
Q

When may a corporation acquire its own shares?

A
  1. to eliminate fractional shares
  2. to collect an indebtedness
  3. to pay dissenting stockholders
47
Q

These are shares which are less than one share.

A

Fractional shares

48
Q

What is the cause of the existence of fractional shares?

A

Issuance of stock dividends

49
Q

Can a corporation invest corporate funds in other corporations with a purpose dissimilar with the purpose of the corporation?

A

Yes but approval (rule of thumb) must be applied

50
Q

When is approval of shareholders not necessary when investing corporate funds?

A

When the investment is necessary to accomplish the primary purpose of the corporation

51
Q

True or False: Investments not under the purposes of the creation of the corporation is ultra vires.

52
Q

Out of where does a corporation declare dividends?

A

Unrestricted RE

53
Q

Can a delinquent shareholder receive dividends?

A

Yes.
Cash dividends must be applied to unpaid balance

Stock dividends are withheld until balance is fully paid

54
Q

Can stock dividends be issued without the approval of SH representing 2/3 of OCS?

55
Q

Stock corporations are prohibited from retaining surplus profits in excess of what percent of their paid in capital?

56
Q

What rate of interest is used in paying unpaid balance by a delinquent SH?

A

Interest provided in the subscription contract.

If none, use legal rate of interest

57
Q

Can a corporation declare dividends when it has zero or negative retained earnings?

58
Q

This is aka negative RE.

A

Retained Earnings Deficit

59
Q

Can additional paid-in capital be declared as dividends or absorb deficiency?

A

No to both

60
Q

What are the requirements to declare cash dividends?

A
  1. Unrestricted RE
  2. Resolution of BOD
61
Q

What are the requirements to declare stock dividends?

A
  1. Unrestricted RE
  2. Resolution of BOD
  3. Vote of 2/3 OCS
  4. sufficient number of authorized unissued shares
62
Q

True or False: Payment of dividends is not a matter of right.

A

True. It is a matter of consensus.

63
Q

Unrestricted RE is aka?

A

Surplus profits

64
Q

Who has the discretion whether or not to declare dividends?

65
Q

True or False: Declaration of stock dividends is akin to forced purchase of stocks.

66
Q

Can treasure share she declared as stock or cash dividends?

67
Q

True or False: The right to dividend will not accrue without the approval of the SEC.

A

False. It will accrue even without approval of SEC.

68
Q

No management contracts shall be entered into for a period longer than how many years for any 1 term?

69
Q

Can you renew a management contract after 1 term of 5 years?

70
Q

What is the exception to the rule of 5 years per term of management contracts?

A

Service contracts relating to exploration, development of natural resources

71
Q

What are ultra vires?

72
Q

What is the status of an ultra vires act?

73
Q

Are ultra vires acts binding to the corporation?

74
Q

Can ultra vires acts be validated and therefore be binding to the corporation?

BLR 221 (10 decks)

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