Corporate Law Module 1 - General Provisions
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Questions and Answers

What is a corporation defined as under the Revised Corporation Code of the Philippines?

  • A group of people organized solely for profit
  • An artificial being created by operation of law (correct)
  • A collective partnership of private entities
  • A single individual with legal rights

Which principle explains the separation of corporate debt from the personal debts of stockholders?

  • Corporate governance
  • Doctrine of legal entity
  • Corporate structure theory
  • Principle of limited liability (correct)

What attribute allows a corporation to claim damages for a damaged reputation?

  • Moral entitlement
  • Judicial recognition
  • Limited liability
  • Legal personality (correct)

Which of the following is NOT an attribute of a corporation?

<p>Ability to feel emotions (A)</p> Signup and view all the answers

Which group of individuals is responsible for incorporating a corporation?

<p>Incorporators (D)</p> Signup and view all the answers

What does the doctrine of legal entity imply for a corporation?

<p>It has a legal personality distinct from its members (C)</p> Signup and view all the answers

What significant change did Republic Act No. 11232 bring about?

<p>It replaced the old Corporation Code (D)</p> Signup and view all the answers

Which classification of corporations is particularly created by special laws?

<p>Special corporations (A)</p> Signup and view all the answers

What protection does a corporation possess against unreasonable searches and seizures?

<p>Immunity under certain conditions (C)</p> Signup and view all the answers

Can a corporate officer refuse to produce records citing self-incrimination?

<p>No, they cannot refuse on those grounds (D)</p> Signup and view all the answers

Under which doctrine is a corporation considered a distinct legal entity?

<p>Legal entity doctrine (A)</p> Signup and view all the answers

What happens to the corporation and its stockholders when the veil of corporate fiction is pierced?

<p>They are considered as one and the same (C)</p> Signup and view all the answers

What is a characteristic often associated with a corporation's existence?

<p>Immortality (D)</p> Signup and view all the answers

What normally protects officers of a corporation from objecting to evidence seized from the corporation?

<p>The corporation's right to object (A)</p> Signup and view all the answers

What does the phrase 'the corporation owes its life to the state' imply?

<p>Corporations must have state approval to exist (C)</p> Signup and view all the answers

What does 'piercing the veil of corporate fiction' refer to?

<p>Using a corporation for illegitimate purposes (D)</p> Signup and view all the answers

What best describes a parent corporation?

<p>A corporation that owns shares of another and exercises control. (C)</p> Signup and view all the answers

What is a key characteristic of a subsidiary corporation?

<p>It can engage in lawsuits independently of its parent. (C)</p> Signup and view all the answers

What defines a closed corporation?

<p>Shares are limited to a specific group of individuals. (C)</p> Signup and view all the answers

Which is NOT a characteristic of an open corporation?

<p>Shares are restricted to a few individuals. (D)</p> Signup and view all the answers

Which describes a corporation by prescription?

<p>A corporation that has existed without government interference for a long time. (C)</p> Signup and view all the answers

What is NOT a reason for the amendment of articles of incorporation?

<p>Change in the board of directors' meeting schedule. (C)</p> Signup and view all the answers

Which of the following actions requires the adoption or amendment of bylaws?

<p>Creating a new class of shares. (C)</p> Signup and view all the answers

Which of the following activities is NOT generally associated with the dissolution of a corporation?

<p>Indenturing corporate certain shares. (C)</p> Signup and view all the answers

What determines the nationality of a corporation according to the incorporation test?

<p>The state of incorporation (D)</p> Signup and view all the answers

What is a corporation sole?

<p>A corporate entity composed of one person (A)</p> Signup and view all the answers

Which type of corporation is organized for the government of a portion of the state?

<p>Public Corporation (A)</p> Signup and view all the answers

What distinguishes a de jure corporation?

<p>It has complied with the requirements of the law (A)</p> Signup and view all the answers

In the control test, what determines the nationality of a corporation?

<p>The nationality of the controlling stockholders (B)</p> Signup and view all the answers

What type of corporation is classified as a private corporation?

<p>A business enterprise formed for commercial purposes (B)</p> Signup and view all the answers

Which of the following is true about de facto corporations?

<p>They attempted to comply with incorporation requirements but were defectively created (A)</p> Signup and view all the answers

Which type of corporation is formed to further religious activities?

<p>Religious and Charitable Corporation (D)</p> Signup and view all the answers

What are treasury shares?

<p>Shares that were issued and then reacquired by the corporation. (B)</p> Signup and view all the answers

What is one characteristic of redeemable shares?

<p>They can be purchased back by the issuing corporation after a fixed period. (D)</p> Signup and view all the answers

Which of the following statements about treasury shares is incorrect?

<p>They are shares that were never sold to investors. (B)</p> Signup and view all the answers

Incorporators are different from corporators in that incorporators are responsible for what?

<p>Establishing a corporation's existence and filing Articles of Incorporation. (C)</p> Signup and view all the answers

What distinguishes founders' shares from other types of shares?

<p>They are typically issued to original founders for their contributions. (A)</p> Signup and view all the answers

What are shares with complete voting rights and privileges?

<p>Shares that provide voting rights as specified in the articles of incorporation (A)</p> Signup and view all the answers

What type of shares typically have partial voting rights?

<p>Common shares (D)</p> Signup and view all the answers

Which shares are usually referred to as 'preferred' or 'redeemable' shares?

<p>Shares with no voting rights (B)</p> Signup and view all the answers

What law restricts the exclusive voting rights of founders' shares?

<p>Commonwealth Act No. 108 (C)</p> Signup and view all the answers

Which type of shares does not provide any voting rights?

<p>Treasury shares (D)</p> Signup and view all the answers

What does the Revised Corporation Code allow regarding share classification?

<p>To classify shares for compliance with legal requirements (B)</p> Signup and view all the answers

Which of the following is NOT a type of share mentioned?

<p>Investment shares (A)</p> Signup and view all the answers

Flashcards

Corporation definition

A corporation is an artificial being created by law with rights to succession and powers authorized by law, incidental to its existence.

Limited Liability

Shareholders are not personally responsible for the debts of a corporation.

Legal Entity Doctrine

A corporation, as a separate entity, has legal rights and responsibilities independent of its owners (shareholders).

Attributes of a Corporation

Characteristics of a corporation that differentiate it from a natural person.

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Corporators

Individuals involved in establishing corporations.

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Incorporators

Individuals who formally establish a corporation, particularly those who sign the Articles of Incorporation.

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Stockholders/Members

Individuals holding ownership interest in a corporation.

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Classes of Shares

Various categories of ownership shares in a corporation, with varying rights and privileges.

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Corporate Veil Piercing

When a court ignores the separate legal existence of a corporation due to fraudulent use or an illegitimate purpose.

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Corporate Immunity from unreasonable search and seizure

Corporations enjoy protection from unwarranted searches and seizures.

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Corporate Self-incrimination

Corporations do not have the right against self-incrimination.

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Corporate Officers' right to object to evidence

Officers can't object to evidence seized from the corporation if the corporation itself does not object.

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Corporate existence

A corporation's existence is reliant on state approval, it begins only legally created.

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Corporate Immortality

A corporation's existence continues beyond its owners' lifetimes.

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Corporate Liability

Corporations are generally not liable for the actions of their shareholders, and vice versa.

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Foreign Corporation

A company formed and operating under the laws of another country that has reciprocal rights with the Philippines.

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Incorporation Test

Determines a corporation's nationality based on the country where it was legally formed, regardless of its shareholders' nationalities.

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Domicile Test

Determines a corporation's nationality based on its primary place of business or principal office.

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Control Test

Determines a corporation's nationality based on the nationality of its controlling shareholders or members.

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Corporation Aggregate

A corporation composed of more than one person.

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Corporation Sole

A corporation owned and run by a single person.

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De Jure Corporation

A corporation legally formed and operating in compliance with the law.

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De Facto Corporation

A corporation attempted to be legally formed but made mistakes. It can be challenged legally.

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Parent Corporation

A corporation that owns shares in another corporation and exerts control over its operations.

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Subsidiary Corporation

A corporation whose shares are owned by another corporation (the parent), and the parent company exercises control over it. It has its own legal identity separate from the parent.

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Close Corporation

A corporation where shares are held by a limited number of individuals, often with restrictions on selling or transferring those shares.

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Open Corporation

A corporation whose shares are available to the public for purchase, commonly traded on stock exchanges.

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Corporation by Prescription

A business entity recognized as a corporation by the government after operating as one for a long period without official documentation.

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Stock Corporation

A corporation formed primarily to make profits for its shareholders. It raises capital by issuing stock.

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Non-stock Corporation

A corporation formed for a specific public purpose, not to make profits for its members. It can be religious, charitable, or educational.

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Founder's Shares

Special shares granted to the original founders of a corporation, often with greater voting rights or profit-sharing privileges.

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Redeemable Shares

Shares that can be bought back by the corporation at a predetermined price, often after a specific period.

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Treasury Shares

Shares that were previously issued and fully paid for, but have been repurchased by the issuing corporation.

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What are shares with complete voting rights?

Shares granting full voting rights and privileges to their owners, as specified in the corporation's Articles of Incorporation.

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What are shares with partial voting rights?

Shares that allow owners to vote but with certain restrictions outlined in the Articles of Incorporation.

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What are shares with no voting rights?

Shares that do not grant voting rights, often called 'preferred' or 'redeemable' shares. They may have other benefits, like guaranteed dividends.

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What are founders' shares?

Shares often granted special rights and privileges to individuals involved in starting the company, including limited voting control.

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What are redeemable shares?

Shares that the corporation can buy back at a specific price and date, as stated in the Articles of Incorporation.

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What is the purpose of classifying shares?

Corporations can categorize their shares to comply with legal requirements and manage shareholder rights.

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What is a key aspect of amending the Articles of Incorporation?

It's the process of formally changing the corporation's foundational document, often requiring shareholder approval.

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How can a corporation dispose of property?

They can sell, lease, or transfer assets according to legal guidelines and internal policies.

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Study Notes

Module 1 - General Provisions

  • This module covers the general provisions, definitions, and classifications of corporations under the Revised Corporation Code of the Philippines.
  • It includes the attributes of a corporation, the principle of limited liability, the doctrine of legal entity, and piercing the corporate veil.
  • It also provides an overview of corporators, incorporators, stockholders, members, and the classifications of shares.

Course Learning Outcomes

  • Students should be able to define a corporation.
  • Students should be able to identify and explain the attributes of a corporation.
  • Students should understand the principle of limited liability and the concept of legal entity.
  • Students should identify the powers of a corporation.
  • Students should identify and define the classes of corporations.
  • Students should be familiar with corporations created by special laws or charters.
  • Students should identify corporators, incorporators, stockholders, and members of a corporation.
  • Students should be familiar with the classification of shares.

Brief Introduction

  • In 2018, Congress passed Republic Act No. 11232, the Revised Corporation Code of the Philippines.
  • This new law replaced the old Corporation Code (Batas Pambansa Blg. 68), which took effect in 1980.

Lesson 1 - General Provisions, Definitions and Classifications

  • A. Corporation Defined:
    • A corporation is an artificial being, created by operation of law.
    • It has the right of succession, and the powers, attributes, and properties expressly authorized by law or incidental to its existence (Sec. 2).

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Related Documents

Revised Corporation Code of the Philippines PDF

Description

This quiz covers the general provisions and definitions related to corporations under the Revised Corporation Code of the Philippines. It includes key concepts such as limited liability, legal entities, and classifications of corporations. Students will explore the roles of corporators and incorporators, along with the different classes of shares.

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