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161 Cards in this Set
- Front
- Back
- 3rd side (hint)
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It is used as a shield to perpetrate fraud and the individuals composing it will be treated identically |
Peircing the veil of corporate entity |
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Doctrine which states that corporation mau exercise only powers expressly authorized by law or incident to its existence |
Doctrine of Limited Capacity |
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Theory of corporation which states that it exist by grant of the State |
Theory of Concession |
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Theory of corporation which states that it exist because the parties want it to exist |
Gennosenshaft Theory |
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Private corporation can only be created by? |
Corporation Code |
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Special law can create only? |
-Public Corporation -Government owned or controlled corporations provided in the interest of common goods and subject to test of economic viability |
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Corporation is not entitled to moral damages |
True |
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This is a method by which the percentage of Filipino equity in corporations engaged in nationalized and/or partly nationalized areas of activities is accuratelt computed and the dimunition of said equity prevented. |
The Grandfather Rule |
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Cannot be successfully attacked in a direct proceeding for that purpose by the State |
De jure corporation |
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Can be attecked directy in quo warranto proceeding but cannot be attacked collaterally |
De facto corporation |
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One that is formed for a religious purpose |
Ecclesiastical corporation |
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One that is formed for a purpose other than ecclesiastical or religious |
Lay corporation |
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One that is organized for public charity |
Eleemosynary corporation |
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One that is organized for profit |
Civil corporation |
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A corporation which exercises power for indefinite period without interference from sovereign power |
Corporation by prescription (Roman Catholic Church) |
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Liability of persons assuming to act as a corporation and those dealing with it |
Liable as general partners for all debts and damages incurred |
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A person who usually discovers a prospective business and brings persons interested to invest in it. He facilitates the creation of corporation by negotiating contracts for its initial operations |
Promoters |
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Promoter's liability on contracts |
Personally liable until the corporation ratifies or adopts such contracts |
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Third person must also agree to absolve promoter from laibility |
True |
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A newly formed corporation is not automatically liable for preincorporation contracts. It will become liable only by adoption, rarification or novation of such contracts |
True |
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I. Redeemable shares may be issued by the corporation only if expressly provided in the articles of incorporation II. They may be deprived of voting rights III. They may be purchased or taken up by the corporation upon the expiration of a fixed period, regardless of the existence of unrestricted retained earnings IV. The terms and conditions for their redemption must be stated in the articles of incorporation and the stock certificate representing the said shares |
All statements are true |
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Shares that grant to the founders certain rights and privileges not enjoyed by other shares |
Founders' shares |
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Founders' shares must be classified as such in the articles of incorporation |
True |
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If the exclusive right to vote and be voted for in the election of directors is granted in founders' shares, it must be for a limited period of? |
Not exceeding 5 years |
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Stock certificate as a rule is issued only if the subscription is fully paid |
True |
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Treasury shares may again be disposed of for what price? |
Reasonable price fixed by the board of directors |
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Shares that are issued without consideration or with no adequate consideration |
Watered Stock |
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Subscription to no-par shares shall be deemed fully paid and non-assessable |
True |
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No par value shares may not be issued for a consideration less than? |
P5 per share |
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Corporatios which cannot issue no par value shares |
Bank Public Utilities Insurance company Trust company Building and Loan association |
BPI TB |
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Preferred shares may be issued only with a stated par value |
True |
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Matters which non-voting shares may nevertheless vote |
-Amendment of the articles or incorportation -Adoption and amendment of by-laws -Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of the corporate entity -Increasing bonded indebtedness -Increase or Decrease of capital stock -Merger or consolidation -Investment of corporate funds in another corporation -Dissolution of corporation |
AASIIMID |
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Also known as corporate franchise. It refers to the right and privilege granted by the State to exist as a corporation. It is vested in the individuals who compose the corporation and not on the corporation itself |
Primary franchise |
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Refers to rights and privileges which are not a prerequisite to corporate existence |
Secondary franchise |
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Term of corporation |
50 years renewable for another 50 years; in no case the extension be earlier than 5 years of the original expiry date |
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Qualifications of incorporators |
-must be natural persons -of legal age -majority of whom must be residents of the Philippines -5-15 -must own at least 1 share |
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Minimum capital requirement |
-25% of authorized capital stock must be subscribed -25% of total subscription paid -paid up capital not less than P5000 |
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Effect of non-use of corporate charter for 2 years |
Deemed dissolved |
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Effect of continuous non-operation for 5 years |
Ground for Suspension |
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Qualifications of a director or trustee |
-5-15 -owner of at least 1 share -majority must be residents of Philippines -not convicted by final judjment for an offense punishable by imprisonment of more than 6 years -do not commit a violation of the corporation code within 5 years prior to date of election or appointment |
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Term of office of director |
1 year |
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The incumbent directors do not automatically cease to hold office upon the expiration of their term if they have yet no successors. This is know as? |
Principle of holdover |
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This method of voting is designed to give minority stockholders a representation in the board of directors |
Cumulative Voting |
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Formula used to determine the votes needed to elect the desired number of directors |
[(# of Outstanding shares x Desired # of directors to be elected)/(Total number of directors to be elected +1)]+1 |
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Qualification of Corporate Officers |
President- must be a director Treasurer- may be a director or not; must be resident Secretary- must be resident and citizen |
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No one can be the president and secretary or president and treasurer at the same time |
True |
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Vote required to have a valid corporate act |
Majority of quorum |
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Created for the purpose of taking immediate action on important matters without the need of a board meeting. Serve as a screening committee |
Executive Committee |
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Powers not delegated to Executive Committee |
-Approval of any action for which shareholders' approval is also required -Filing of vacancies in the board -Amendment or repeal of bylaws or adoption of new bylaws -Amendment or repeal of any resolution of the board which by its express terms is not so amedable ore repealable -Distribution of cash dividends to shareholders |
AFAAD |
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Corporations covered by revised corporate governance |
-Sell equity/debt securities to the public -Assets in excess of P50,000,000 and at least 200 stockholders who own at least 100 shares of each of equity securities -Grantees of secondary licenses -Equity securities are listed on Exchange |
SAGE |
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Number of independent director in the Board |
At least 2 independent directors or 20% of the members of the board, whichever is lesser but in no case less than 2 |
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A person who is independent of management and free from any business |
Independent Director |
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Maximum holdings of independent director |
Not more than 2% holdings |
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A director who is also head of department or unit of the corporation or performs any work related to its operation |
Executivr Director |
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A director who is not the head of a department or unit of the corporation nor performs any work related to its operation |
Non-executive directors |
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Chair and CEO is as much as possible be separated. In case unified, the proper checks and balances should be laid down to ensure that the Board gets independent views |
True |
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Disqualifications which are normally violation of SRC, banking and Corporation Code and convicted by final judjment |
Permanent Disqualification |
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A temporarily disqualified director shall have how manh days to take appropriate action to remedy or correct the disqualification. Failure to so so shall make disqualification permanent |
Within 60 business days |
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The board shall appoint a compliance officer who shall have the rank of at least? |
At least vice president; if none, corporate secretary preferably a lawyer |
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Independent directors should always attend Board Meetings. Unless otherwise provided in the by-laws, their absence shall not affect the quorum requirement |
True |
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To monitor directors' compliance with the attendance requirements, corporations shall submit to Commission record of attendance in Board meetings, when? |
On or before January 30 of the following year |
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Audit Committee shall consist of how many directors? |
At least 3 directors. The chair must be an independent director |
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Nomination Committee and Compensation or Remuneration Committee shall be composed of? |
At least 3 directors one of whom should be an independent director |
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Compliance Officer shall issue certification every? |
January 30 |
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Stockholders' rights |
-Vote on all matters that require their consent -Pre-emptive right -Appraisal right -Inspect corporate books and records -Information -Dividends |
VPAIID |
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Manual of Corporate Governance shall be submitted to the Commission for its evaluation within? |
180 business days from the date of effectivity of the Code |
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Sanctions in case of violation of Corporate Code |
Fine not more than P200,000 Any violation to SRC shall be assessed separately |
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Report of election shall be submitted by the secretary to the SEC within? |
30 days |
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Rules in filing of vacancies |
By the stockholders - ERI - Other than ERI, remaining BOD does not constitue quorum By the remaining BOD - Other than ERI, remaining BOD still constitute quorum ERI Expiration of term Removal Increase |
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Directors are not entitled to compensation except for? |
Reasonable per diems |
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Total yearly compensation of directors shall not exceed? |
Shall not exceed 10% of net income before income tax of the preceding year |
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Liability of corporate officers in case of violation of OLD duties |
Jointly and severally (Solidary) |
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Fiduciary Duties of Corporate Officers |
Duty of Obedience Duty of Loyalty Duty of Diligence |
OLD |
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A contract of the corppration with one or more of its directors, trustees or officers is? |
Voidable, at the option of such corporation |
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In order for the self dealing director transactions be valid, requisites are? |
-Presence is not necessary to constitute quorum -Vote is not necessary for the approval of contract -Contract is fair and reasonable -Previously authorized by BOD in case of officers -Full disclosure of the adverse interest of directors is made at meeting |
PVCPF |
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Liabilty of directors or officers for secret profits |
Liable as trustee |
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It is when a director holds seats in the BOD of two or more corporations |
Interlocking directorate |
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Requisites for validity of contract between 2 or more corporations with interlocking directorate |
-no fraud -contract is fair and reasonable -if nominal interest- presence not necessary for quorum and vote not necessary for approval of contract |
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When shall it be considered subtantial interest? |
Stockholdings exceeding 20% |
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This is the doctrine to the effect that when a director attempts to acquire in violation of his duty, he must account for all profits derived to the corporation |
Doctrine of corporate opportunity |
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Powers expressly granted to a Corporation |
Express powers |
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Powers which are necessary to carry into effect express powers |
Implied powers |
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Powers that a corporation may exercise by reason of its very existence as a corporation |
Incidental or Inherent powers |
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Under this doctrine, the capital stock and assets of the corporation are held in trust for creditors. There shall be no distribution of assets to shareholders until the claims of creditors have been paid |
Trust Fund Doctrine |
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No management contract shall be entered into for a period longer? |
Longer than 5 years for any one term except to exploration, development, utilization of natural resources |
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Corporate acts which require vote of BOD and Outstanding Capital Stock |
-Amendment of the Article of Incorporation -Increase or Decrease capital stock -Increasing bonded indebtedness -Investment of fund in another corporation other than for primary purpose -Denial of pre-emptive right * -Sale of all or substantially all of corporate property -Management Contract */ -Extension or shortening of corporate term -Declaration of stock dividend * -Amendment of by laws / -Merger and Consolidation -Adopt a plan of distribution of assets of a nonstock corporation -Corporate Dissolution |
AIIIDS MEDAMAC * * * / / |
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Corporate acts which require vote of Majority of BOD |
-Vacancies filing -Executive Committee delegation of power |
VE |
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Corporate act which requires vote of Majority of Quorum of BOD |
Fixing of issuance price when authorized by the AOI |
Fi w/ |
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Corporate acts which require vote of majority of outstanding capital stock |
-Calling for special meeting for removal of director -Adoption of by laws after incorporation -Revocation of delegated power of BOD to amend by laws -Election of directors -Compensation of directors -Fixing of issuance price when not authorized by AOI |
CARECFw/o |
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Corporate acts which require vote of 2/3 of outstanding capital stock |
-Removal of directors -Interlocking director -Disloyalty of director -Delegation of power to BOD to amend by laws -Self dealing director |
RIDDS |
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Adoption of by laws prior to incorporation shall be approved and signed by? |
All the incorporators |
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The filing of AOI is a condition precedent for the acquisition by the corporation of juridical personality, while the filing of by laws is a condition subsequent thereto |
True |
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Certification by government agency of new by laws or amendment thereto is required for? |
Bank Banking Institution Building and Loan Association Educational institutions Other special corporations |
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Proxy vote during what meeting is not allowed |
Director's meeting |
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Regular meeting of directors shall be held when? |
Monthly |
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Regular meeting of stockholders shall be held when? |
Annually as fixed by the bylaws; if none, any date in April |
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Notice of regular meeting of directors |
1 day prior |
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Notice of regular meeting of stockholders |
2 weeks prior to meeting |
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Special meeting of directors shall be held when? |
Anytime upon call of president |
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Special meeting of stockholders shall be held when? |
Anytime deemed necessary |
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Notice of special meeting of directors |
1 day prior |
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Notice of special meeting of stockholders |
1 week prior |
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Place of meeting of directors |
Anywhere |
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Place of meeting of stockholders |
City or municipality where the principal office of corporation located |
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A special meeting of stockholders for the removal of directors must be called by? |
Secretary on order of president or written demand of majority of stockholders |
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Proxy is valid only for meeting which it is intended except in the case of? Which shall be effective for a period of? |
Continuing proxy; not exceeding 5 years at any one time |
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Voting trust shall be effective for a period of? |
Not exceeding 5 years at any one time except require by loan agreement |
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I. Proxy has no legal title while a trustee acquires title of transferor II. Proxy is generally revocable, while voting trust agreement is irrevocable for the duration of its term III. Proxy is valid only for the meeting which it was intended except continuing proxy, while voting trust agreement is not limited to a particular meeting IV. Proxy need not be notarized while voting trust agreement is required to be notarized |
All statements are true |
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Certificate of stock covered by voting trust agreement shall be cancelled and a new one shall be issued in the name of trustee |
True |
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Every corporation must adopt by laws within? |
1 month after receipt of official notice of issuance of its certificate |
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Amenden or new bylaws shall only be effective when? |
Upon issuance by the SEC of a certification that the same are not inconsistent with this Code |
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Holders of subscribed shares not fully paid which are not deliquent shall have all the rights of stockholder |
True |
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Revocability of pre-incorporation subscription before filing of AOI |
Irrevocable for at least 6 months from date of subscription except: - all of the other subscribers consent to revocation -the corporation fails to materialize within 6 months or longer as stipulated in the contract of subscription |
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Revocability of pre-incorporation subscription after filing of AOI |
Irrevocable; no pre-incorporation subscription may be revoked |
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Revocability of post-incorporation subscription |
Irrevocable after its acceptance by the corporation unless consented by all stockholders |
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When consideration for stocks is other than actual cash or consists of intangible property, valuatiom thereof shall initially be determined by? |
Incorporators or BOD subject to approval of SEC |
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Shares of stock shall not be issued in exchange for? |
Promissory notes Future service |
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No certificate of stock shall be issued to a subscriber together with interest and expenses in case of deliquent shares has been paid |
True |
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One brought by stockholders on behalf of corporation |
Derivative suit |
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Action brought by a stockholder against the corporation |
Individual suit |
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Brought in behalf of himself and all other stockholders against a group of stockholders |
Representative Suit |
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No transfer of shares shall be valid until it is recorded in the books of the corporation |
True |
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Heirs do not automatically becomes a stockholder upon death of a stockholder |
True |
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Liability of directors for watered stocks when he consents or has knowledge and does not express objection in writing for the issuance of shares for a consideration less than its par or in excess of its fair value |
Solidary for the difference between the FV received and the par value |
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How many days from the date specified in contract make shares deliquent when no payment is made? |
Within 30 days |
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sale of deliquent stock shall be made when? |
Not less than 30 days nor more than 60 days from date it becomes deliquent |
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Copy of resolution ordering the sale of deliquent stock shall be published for? |
Once a week for 2 consecutive weeks in newspaper of general circulation of the locality of corporation |
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Deliquent shares shall not be entitled to vote nor any rights except? |
Right to dividends |
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How many days shall the corporation furnish to stockholder who request in writing a financial statement |
Within 10 days from receipt of a written request |
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At the regular meeting FS duly signed by independent CPA shall be presented to stockholders. In what case shall the FS may be certified under oath by the treasurer |
If paid up capital is less than P50,000 |
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Instances where any stockholder can exercise appraisal right |
Amendment of AOI -authorizing preferences in any respect superior to those of outstanding shares og any class -changing or restricting rights of stockholder -extending or shortening term of existence Sale of all or substantially all of corporate property Investment of corporate funds in another corporation Merger or consolidation |
A(ACE) SIM |
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Any dissenting stockholder shall make written demand for the payment of the fair value of his shares within? |
30 days after the vote was taken |
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Within how many days from the date of the corporate action shall the FV of shares be determined by 3 disinterested persons in case FV cannot be agreed |
Within 60 days |
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The cosf of appraisal shall be borne by? |
The corporation, except when the FV ascertained is approximately the same, which case it shall be borne by the stockholder |
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Number of directors of non stock corporation |
May be more than 15 |
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Term of office of director of non stock corporation |
3 years |
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Manner of voting in non stock corporation |
Non-cumulative (entitled to 1 vote) |
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Transferability of interest of non stock corporation |
Non transferable |
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Place of meeting of members of non stock corporation |
Any place inside the Philippines |
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A corporation owned by not more than 20 persons |
Close corporation |
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Entities which cannot operate as close corporation |
Banks Public utilities Insurance companies Mining or oil companies Stock exchanges Educational institutions institutions Public interest vested corporation |
BPI-MSEP |
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Articles of incorporation of close corporation may provide that the business shall be managed by the stockholders instead of BOD |
True |
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A corporation is not a close corporation when at least 2/3 of its voting stovk is owned by another which is not a close corporation |
True |
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Trustees of non stock educational institutions shall have a number of? |
Not less than 5 nor more than 15 |
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Term of office of trustees of nonstock educational institutions |
5 years |
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Corporation which may be formed by one or more persons |
Corporation sole |
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When does a presiding elder shall become a corporation sole? |
From and after the filing with SEC of articles of incorporation |
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Religious socities may incorporate for the administration of its temporalities or for the management of its affairs, upon written consent at a meeting of at least? |
At least 2/3 of its membership |
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Even if the corporation was formed under our jurisdiction, it shall be considered a foreign corporation if controlled by foreigners |
True |
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The nationality of corporation follows that of the country under whose laws it was incorporated |
Incorporation test |
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The nationality of corporation follows that of the stockholders owning the controlling interest |
Control Test |
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The Grandfather Rule will be applied only if there are questions about compliance with Filipino ownership requirements |
True |
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The Grandfather rule applies to the registration of the subsidiary if the capital structure of both the parent corp and its subsidiary do not comply with the 60%:40% Filipino to foreign ratio |
True |
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Examples of public corporation |
Provinces, cities, municipalities, barangays |
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Refer to corporstions created under a special law and those under Corporation Code where the government owns at least a majority of its outstanding voting capital |
Government-owned or controlled corporations (Land Bank, GSIS) |
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Organized for profit which are granted a franchise by the State to perform public service |
Quasi-public corporations (Meralco) |
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Conditions which must be present in order for a de facto corporation to exist |
-there must be a valid law -attempt in good faith to incorporate -actual exercise of corporate powers -certificate of incorporation is issued Ex: (majority of incorporators are not residents of the Phil; name is similar; acknowledgment is defective) |
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In what cases will preclude even the existence of a de facto corporation |
-absence of AOI -failure to file AOI |
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Those stockholders mentioned in the AOI and who are signatories of such document |
Incorporators |
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No meeting is necessary except when required by the corporation code pertains to what corporate act? |
Amendment of the articles of incorporation |
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It protects directors who act with due care and in good faith provided their decisions are within the law and made in the best interests of the corporation |
Business judjment rule |
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