1 year – term of board
trustees up to three years
By-laws
the government of the corporation or organization.
Certification: Mandatoty by sec
in case of conflict between by laws or law – the law shall
prevail. The law on corp and by laws, the code shall
prevail.
sec will reqcquire payment
issuance of cert of incorporation
attached thereto are the articles and the by laws
noc orp shall exercercise powers excecpt
conferred by law
four spurces of pwer
conferred by law
conferred by the by laws
necessary or incidental powers
voidable or capable of performance
ultra vs illegal – voidable
capable of ratification
powers which ar ot conferred by the law
doctrine of apparent authority
stock – interest in the management
or right of the owner and management
interested in distribution of dividends, profits or assets
– interest in assets and payment of dues..
preferred shares
treasury shares – shares of stock subsequently
redeemable shares: (sec 8)
A redeemable share 1. must be expressly stated in the articles)
2. All conditions must be stated, once issued
allowed by law to redeem and purchase its own shares)
recall and remember:
authorized capital stock
subscribed capital stock
paid up capital stock
once redeemed or purchased: The issuing corporation, the redeemable shares are consiered retired. Unless the same is also provided in the articles. A corporation has redeemable shares.
sinking pond – pond reserved or allocated or set aside to answer about that redeemable share for future redemption. (google – A bond sinking fund is a restricted asset of a corporation that was required to set aside money for redeeming or buying back some of its bonds payable.)
voting rights? – yes, deprived of their rights to vote unless provided in the aetticles.
outstanding capital stock
stock corp.
stock certificate – written acknowledgement or evidence of stocks; it is not a stock. certification of ownership..
stockholder – is a person who holds or owns a share a stock in a corporation
4 ways that a person may become a stockholder
- he subscribes to a stock during incorporation (by subscription)
- when he purchases stocks from the corporation
- when he purchases stocks from stockholders
- through other modes: donation or transfer of stocks through succession.
By-laws
the government of the corporation or organization.
Certification: Mandatoty by sec
in case of conflict between by laws or law – the law shall prevail. The law on corp and by laws, the code shall
prevail.
sec will reqcquire payment
issuance of cert of incorporation
attached thereto are the articles and the by laws
noc orp shall exercercise powers excecpt
conferred by law
four spurces of pwer
conferred by law
conferred by the by laws
necessary or incidental powers
voidable or capable of performance
ultra vs illegal – voidable (not all ultra vires acts are not illegal.. contrary to law or public policy or moral = void)
if not illegal, capable of ratification
powers which ar ot conferred by the law
doctrine of apparent authority – Apparent authority is the power of an agent to act on behalf of a principal, even though not expressly or impliedly granted. “The doctrine protects innocent third persons who have reasonably relied to their detriment upon the representations of those whom the principal holds out as possessing authority to act for him.”
stock – interest in the management or right of the owner and management
interested in distribution of dividends, profits or assets
– interest in assets and payment of dues..
preferred shares
treasury shares – are treasury considered issued?
are treasury considered fully paid?
are t.s outstanding?
are t.s entitled to dividends?
can t.s be fistributed to stockholders by way of evidence?
can t.s be re-issued?
what is the meaning of doctrine of equality of shares?
t.s as unrealized income?
if it is unrealized income? are they distributable in cash or stocks?
redeemable shares
recall and remember:
authorized capital stock – fixed amount in the AOI divided into shares & every share has monetary/par value in peso
subscribed capital stock
paid up capital stock
outstanding capital stock
stock corp. –
are those which have capital stock divided into shares and are authorized to distribute to the holders of such shares, dividends, or allotments of the surplus profits on the basis of the shares held.
stock certificate – acknowledgement or evidence of ownership of stocks; it is not a stock.
stockholder – is a person who holds or owns a share a stock in a corporation
4 ways that a person may become a stockholder
- he subscribes to a stock during incorporation (by subscription)
- when he purchases stocks from the corporation
- when he purchases stocks from stockholders
- through other modes: donation or transfer of stocks through succession.
Who shall sign the cert of stocks – to be valid must be signed by the following: Pres or VP.
and to be countersigned by: the corporate secretary or the assistant secretary with the seal of the corporation must be affixed in the certificate.
Section 63. Issuance of Stock Certificates. – No certificate of stock shall be issued to a subscriber until the full amount of subscription together with interest and expenses (in case of delinquent shares), if any is due, has been paid.
Certificate authorizing registration
treasurer
—
when certificate of stock may be issued? Until full payment.
—
Even if a person has no certificate of stock – can be considered a stockholder.
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What is a corporation?
A corporation is an artificial being created by operation of law, having the right of succession and the
powers, attributes, and properties expressly authorized by law or incidental to its existence. (Sec. 2)
A corporation has powers:
Kinds of Powers
a.1 Express – those expressly authorized by the Corporation Code and other laws, and its Articles of
Incorporation or Charter.
a.2 Implied – those that can be inferred from or necessary for the exercise of the express powers.
a.3 Incidental – those that are incidental to the existence of the corporation.
b) Express Powers under the Corporation Code
b.1 General Powers
to sue and be sued in its corporate name;
- succession (perpetual existence);
to adopt and use a corporate - seal;
- to amend Articles of
- Incorporationn
Specific Powers (Sec. 36 to Sec. 44)
- Power to Extend or Shorten Corporate Term (Sec. 36)
- Power to Increase or Decrease Corporate Capital Stock (Sec. 37)
Power to Deny Preemptive Right (Sec. 38) - Power to Incur, Create Bonded
Indebtedness (Sec. 38 - To sell, dispose, lease, encumber
- all or substantially all corporate
- assets (Sec. 39)
- To Purchase or acquire own shares
(Sec. 40) - Power to invest in another
corporation, business other than
the primary purpose (Sec. 41)
An ultra vires act is one committed outside the object for which a corporation is created as
defined by the law of its organization and therefore beyond the power conferred upon it by law (Atrium
Management Corporation v. Court of Appeals, G.R. No. 109491, February 28, 2001)
Ultra vires act vs. illegal acts – The term ultra vires is distinguished from an illegal act for the
former is merely voidable which may be enforced by performance, ratification, or estoppel, while the
latter is void and cannot be validated
——
Regular meetings – periodically held that is stated specifically, regular meetings are stated meetings.
2nd Tuesday of September; in the absence of the provision in the by-laws, the RCC shall
Notice requirement:
Notice of regular or special meetings stating the
date, time and place of meeting must be sent to every
director or trustee at least two days prior to the scheduled
meeting, unless a longer time is provided in the by-laws. A
director of trustee may waive this requirement, either
expressly or impliedly. (Sec. 52)
Stockholders:
- Regular meetings –
Regular meetings of stockholders or members shall be held annually on a date fixed in the by-laws, or if not so fixed, on any date after 15. April of every year as determined by the board of directors or trustees. Provided, that written notice of regular or special meetings shall be sent to all stockholders or members of record at least 21 days prior to the meeting, unless a different period is required in the by laws, law, or
regulation. Provided, further, that written notice of regular meetings may be sent to all stockholders or members of record through electronic mail or such other manner as the Commission shall allow under its guidelines.
2. Special Meetings –
Special meetings of stockholders or members shall be held at any time deemed necessary or as provided in the by-laws. Provided, however, that at least one week written notice shall be sent to all stockholders or members, unless a different period is provided in the by-laws, law or regulation.
Notice of meetings shall be sent through the means of communication provided in the by-laws, which notice shall state the time, place and purpose of the meetings
Place: Stockholders’ or members’ meetings, whether regular or special, shall be held in the principal office
of the corporation as set forth in the articles of incorporation, or, if not practicable, in the city or municipality where the principal office of the corporation is located. Provided, that any11 city or municipality in Metro Manila, Metro Cebu, metro Davao, and other Metropolitan areas shall, for purposes of this section, be considered a city or municipality
For meeting of the Bpard – Anywhere, wthere in our outside the Philippines
Requirement of a Valid meeting:
1. Mut be previous or valid notice: Must be held on the stated date and appointed time as designated in thw by laws or at any reasonable time threafter.
2. There must be proper notice.
3. It must be called by the proper person
4. IThere must be quorum
For corporations which are stock, the interest of stockholders are great, immeasurable, that is why the validity of the meeting.
2 and 3. Notice for a meeting. The vp or secretary can do it. (please attend the meeting of the board, or in behalf of the President)
Quorum – 2/3. Number required to constitute is that which is that provided in the by laws, in the absece of the provision then it is 50+1.
Proxy – 50 percent plus 1 .. board meeting not allowed to have proxy. Presumption, if there is no greater majority in the by laws, the quorum is the majority 50 + 1. It is not always 50+1.. the by laws may always provide, sometimes it will be 2/3..
(Majortity or 2/3 of the outstanding capital stock..)
Amendments – (sec 102)
stock corp – voting requirement: majority of the members of the board; members
Stock holders – it must be a vote of affirmation of 2/3 of at least representing outstanding capital stock.
non-stock – at least majority of the members of the board..
by laws – government of the coroporation; internal rules.
Bylaws may be amended according to the procedures and voting requirements contained within the bylaws. When the bylaws do not contain provisions for their amendment, they may be amended by approval of a majority of the members at a meeting where quorum is present.
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Case: Tan et. Al vs sycip LAM gR 953468 agust 17, 2006
https://lawphil.net/judjuris/juri2006/aug2006/gr_153468_2006.html
Living members.. dead not counted..
No issue stock certificate if it is not fully paid. No issuance of stock certificate to stockholders if it has not yet paid to BIR. BIR will issue approval if ready for release.
————-
3 fold duties of directors and trustees THe corporate officers have the ff duties
1. Duty of diligence – one must be careful and not negligent in his actions. The duty not tobe negligent.
2. Duty of obedience – must follow the law; must be obedient
3. Duty of loyalty – Trustees, officers (must have loyalty expected of them)
*Negligence – would result to liabilities.. it should be gross negligence and not simple negligence. Gross negligence with bad faith. Breach will result to admin aor civil liabilities. (damage to the corporation)
In times of conflict of interest of members of the board, the interest of the corporation must prevail*
(political and economic right)
Vote and be elected
Right to disassociate, to sell their shares, just in case disassociation to the corporation
Assignment
appraisal right?
Right of actions. any stock holder or member may file an indivudal suit.
Individual suit – the stockho;der may personally file the action. the action is filed in his name.
—
Any stockholder has the right of action: (political and economic right)
- Class Suit or representative- filed when stockholders or members who have the same common sentiment or cause of action may file action.
- Individidua suit or action – filed when cause of action belongs to him and him alone. (e.g during election, denied to vote)
- derivative suit – a corp is a party and a corp is a party in interest. A stockholder or member is merely a nominal party. The action in derivative suit is filed in behalf of the ciporation. because damage is caused against the corp. and the stockholders are filing action for the benefit of the corporation.
e.g 5 members of the board
Requirements for bringing derivative suit?
1. There must be an existing cause of action in favor of the corporation (must be elleged in the complain). (when there is breach of duty or when there is misappropriation of money of the corporation)
2. the stock holder or member Must be a demand from the corporation to correct if not to sue (must be a current member)
3. There must be a written demand exhaustion of intra corporate remedies (meeting of the board) – there must be a writte demand to sue
4. No appraisal rights
2. One filing Must me a member of the board at the time of the filing
There
4. There must be an existing cause of action
example of re #1 Angeles vs santos 64 PHIL 697
example of req# 2 reyes vs tan (3 scra 198)
Pascual vs dels sorosa 19 PHIL 82
if singular – it does not follow nga sya lang. Others may join to file the derivative suit.
requirement for the filing df derivative suit?
Uneder loyalty subject: Doctrine of Coprorate opportunity
1. Maybe given a task, and through that task, there may be corporate opportunity if he gains profits and prefers himself than the corporation. Conflict of interest comes in
2. By virtue of his position as member of the baord or as officer, there is a cororpatte opportunity. Gains profits and gains profits than the corporation. Duty of loyalty shall apply.
3.
Intra corporate remedy – must come in otherwise there is no derivtive action. Must be exhausted bby the concerned stockholders or members
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Non-stock corporation
Term not more than 3 years
members – not more than 15
membership is not transferrable – Yes the membership maybe terminated; Se. 90
Right to disassociate – ?
Special Corporations
share of stock – represents the interest of the owner and the stock holder in the mx in the disribution of divident and surplus profits. During disollution the distribution, the distribution of assets remaining after all debts are paid.
share of stock may either be: par value or no par vlaue –
par value: it has a corresponding nominal value. authorized capital stock. every share, tehre is a corresponding par value. That par value is the nominal value of a share of stock.
No par value: It has no nominal value. (value maybe fixed by the board)
number of shares and
no par value – no specific amount, amount maybe fixed by the board
a corporstion may issue a no par vlue share of stovk. there are hpwever corporation that are not allowed by law to issue a non par value (anks, trust, insurance, buildings and loans, public utilities)
preferred shares of stock
common shares – ordinary shares.
preference in the distribution of dividens, and assets.
preferred shares must always be a par value shares of stock.
effect if no par value share is issued: when one issued a non par value share of stock, it is deemed that he is fully paid that he has (issued and fully paid)
if one is a holder of a non par value – cannot be held liable to the corporation or to its creditors with respect to his share of stock.
no par values hared less than 5 pesos
par value is issued: Considered and treated as capital of the corporation when paid
a stockholder can still be considered owner wven without certificate of stock,
Sec opinion august 24, 1987. – canot be made if it will be result to Redemption may not be made where the corporation is insolvent or if such redemption would cause insolvency ot inability of the corporation to meet its debts as they mature. Such limitation is based on the principle that corporate assets are a trust fund for creditors.
treasury shares –
I bleed rainbow 