Title XII

Question 1

What requisites should be present in the Articles of Incorporation for a stock corporation be considered to be a close corporation?

Answer 1

• All the corporation’s issued stock of all classes, exclusive of treasury shares, shall be held of record by not more than a specified number of persons, not exceeding 20;
• All the issued stock of all classes shall be subject to one or more specified restrictions on transfer permitted by Title XII of the RCCP, particularly, a preemption of shares is restricted in favor of any stockholder or of the corporation; and
• The listing of the corporate stocks in any stock exchange or making a public offering of those stocks is prohibited.

Question 2

What following corporations cannot be close corporations?

Answer 2

• Mining or oil companies
• Stock exchanges
• Banks
• Insurance companies
• Public utilities
• Educational Institutions
• Corporations declared to be vested with public interest

Question 3

What is the numerical limit of stockholders in a close corporation?

Answer 3

20 stockholders and it should be specified in the articles of incorporation.

Question 4

Does the numerical limit of stockholders in a close corporation apply to juridical persons?

Answer 4

Yes.

Question 5

Distinguish closed corporation from closely held corporation