Title XI Flashcards
NONSTOCK CORPORATIONS (42 cards)
Define What is a nonstock corporation.
It is a corporation where no part of its income is distributable as dividends to its members, trustees or officers.
Enumerate the essential requisites of a nonstock corporation.
- It does not have a capital stock divided into shares.
- No part of its income is distributable as dividends to its members; and
- Nonstock corporations must be formed or organized for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar purposes, like trade, industry, agricultural and like chambers or any combination thereof.
As to component, what is the distinction of a nonstock and stock corporation?
Nonstock corporations has members while stock corporations has shareholders.
As to board members, what is the distinction of a nonstock and stock corporation?
Nonstock corporations has trustees while stock corporations has directors.
As to existence of shares, what is the distinction of a nonstock and stock corporation?
Nonstock corporations, has no capital stock divided into shares while stock corporations has capital stock divided into shares.
As to dividends, what is the distinction of a nonstock and stock corporation?
No dividends are declared in nonstock corporations while dividends are declared in stock corporations.
As to purpose, what is the distinction of a nonstock and stock corporation?
The primary purpose of nonstock corporations is non-profit; it is limited to those specified under Section 87 of the RCCP while the purpose of stock corporations are primarily for business.
As to business activities, what is the distinction of a nonstock and stock corporation?
Nonstock corporations can conduct business but only if it is incidental to the primary purpose while the business purpose of a stock corporation is its primary purpose.
As to voting rights, what is the distinction of a nonstock and stock corporation?
The voting rights can be modified, limited or broadened in nonstock corporations but in stock corporations, one share – one vote.
As to transferability of interest, what is the distinction of a nonstock and stock corporation?
In nonstock corporations, membership is generally non-transferable but in stock corporations shares are transferable.
As to termination, what is the distinction of a nonstock and stock corporation?
Membership can be terminated in nonstock corporations but in stock corporations, ownership of shareholder cannot be terminated until the transfer of the shares or upon liquidation.
As to effect of death, what is the distinction of a nonstock and stock corporation?
Death of a member terminates that membership; Generally, membership is not transferred in nonstock corporations but in stock corporations, shares can be acquired through succession.
As to dues, what is the distinction of a nonstock and stock corporation?
Payment of dues can be required in nonstock corporation but in stock corporation, no dues are paid.
As to the number of board members, what is the distinction of a nonstock and stock corporation?
There can be more than 15 trustees in nonstock corporations but in stock corporations, there should not be more than 15 directors.
As to term of board members, what is the distinction of a nonstock and stock corporation?
The term is three years in nonstock corporations but in stock corporations the term is one year.
As to voting, what is the distinction of a nonstock and stock corporation?
Cumulative voting is not allowed in nonstock corporation unless provided for in the Articles of By-laws; The general rules in Section 23 of the RCCP is that the members of a nonstock corporation may not cast more than one vote for one candidate but in stock corporations cumulative voting is expressly allowed.
As to liquidation, what is the distinction of a nonstock and stock corporation?
Generally, the members will not get a share in the assets unless provided for in the Articles and Bylaws in nonstock corporations but in stock corporations, shareholders will get their share in the net assets knows as liquidated dividends.
As to election of officers, what is the distinction of a nonstock and stock corporation?
The members may directly elect the officers of the nonstock corporation unless otherwise provided in the Articles of Incorporation and Bylaws but in stock corporations, officers are elected by the Board of directors.
What is a foundation?
A foundation is a nonstock, nonprofit corporation established for the purpose of extending grants and endowments to support its goal or raising funds to accomplish charitable, religious, educational, athletic, cultural, literary, scientific, social welfare or similar objectives.
Is there a need to amend the Articles of Incorporation when its capital is increased in nonstock corporations?
No, there is no need to amend the Articles of Incorporation.
What is a nonprofit corporation?
A corporation is a nonprofit corporation if it does not distribute any part of its income to stockholders or members.
What is the basis of the nationality of a nonstock corporation?
It is computed on the basis of the nationality of its members and not premised on the membership contribution.
What rules does the SEC provide that a nonstock corporation is considered Philippine National?
- If all of its member are Filipino citizens; or
- if at least sixty percent of its member entitled to vote are citizens of the Philippines; or
- If all the members of a foreign nonstock corporation licensed to do business by the SEC are citizens of the Philippines
What are the purposes that a nonstock corporation be organized?
- Charitable
- Religious
- Educational
- Professional
- Cultural
- Fraternal
- Literary
- Scientific
- Social
- Civic service
- Similar activities like trade, industry, agricultural and like chambers of any combination thereof.
