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A corporation can increase its capital stock without any approvals.
A corporation can increase its capital stock without any approvals.
False
All corporations have perpetual existence as a default characteristic.
All corporations have perpetual existence as a default characteristic.
True
A corporation must send written notice of a stockholders' meeting to all stockholders.
A corporation must send written notice of a stockholders' meeting to all stockholders.
True
Bylaws of a corporation may contradict laws and public policy.
Bylaws of a corporation may contradict laws and public policy.
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In a stock corporation, issuing or selling stocks requires approval from the stockholders.
In a stock corporation, issuing or selling stocks requires approval from the stockholders.
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Treasury shares are shares that a company has issued and subsequently reacquired.
Treasury shares are shares that a company has issued and subsequently reacquired.
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Once shares are designated as treasury shares, they cannot be resold by the company.
Once shares are designated as treasury shares, they cannot be resold by the company.
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A corporation whose term has expired can apply for the revival of its corporate existence.
A corporation whose term has expired can apply for the revival of its corporate existence.
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The revival of a corporate existence takes effect on the same day as the original expiry date.
The revival of a corporate existence takes effect on the same day as the original expiry date.
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Treasury shares are kept by the company in its treasury indefinitely without any reissue options.
Treasury shares are kept by the company in its treasury indefinitely without any reissue options.
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A person convicted of a crime with a prison sentence of more than 6 years can still be elected or appointed as a director.
A person convicted of a crime with a prison sentence of more than 6 years can still be elected or appointed as a director.
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Nonstock corporations must include specific information about contributors when applying for a revival.
Nonstock corporations must include specific information about contributors when applying for a revival.
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Stockholders must receive written notice of the meeting that includes the time, place, and reason for the meeting.
Stockholders must receive written notice of the meeting that includes the time, place, and reason for the meeting.
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A corporation can only have a perpetual existence without any specific conditions attached to its revival.
A corporation can only have a perpetual existence without any specific conditions attached to its revival.
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Treasury shares are always sold at their par value as fixed by law.
Treasury shares are always sold at their par value as fixed by law.
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If a director can be removed without cause, it must not unfairly take away the rights of minority stockholders.
If a director can be removed without cause, it must not unfairly take away the rights of minority stockholders.
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The SEC can order the removal of a disqualified director if they were found to have committed fraud.
The SEC can order the removal of a disqualified director if they were found to have committed fraud.
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Vacancies in the board due to an increase in board seats do not require a meeting to elect replacement directors.
Vacancies in the board due to an increase in board seats do not require a meeting to elect replacement directors.
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Directors automatically receive compensation for their roles, regardless of any provisions in the bylaws.
Directors automatically receive compensation for their roles, regardless of any provisions in the bylaws.
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A director's removal with cause requires a unanimous vote from the board.
A director's removal with cause requires a unanimous vote from the board.
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The SEC must be notified within 3 days if a director is disqualified.
The SEC must be notified within 3 days if a director is disqualified.
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Redeemable shares can only be purchased by the corporation under specific conditions laid out in the articles of incorporation.
Redeemable shares can only be purchased by the corporation under specific conditions laid out in the articles of incorporation.
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A corporation must always have unrestricted retained earnings to redeem shares from shareholders.
A corporation must always have unrestricted retained earnings to redeem shares from shareholders.
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The SEC can order an election for the removal of any director or trustee.
The SEC can order an election for the removal of any director or trustee.
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A corporation can only issue redeemable shares if approved by the Securities and Exchange Commission (SEC).
A corporation can only issue redeemable shares if approved by the Securities and Exchange Commission (SEC).
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The term of a corporation can be changed without notifying the Commission if it is stated in the articles of incorporation.
The term of a corporation can be changed without notifying the Commission if it is stated in the articles of incorporation.
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A special meeting to remove a director can be called by any stockholder regardless of their ownership percentage.
A special meeting to remove a director can be called by any stockholder regardless of their ownership percentage.
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Redeemable shares include an automatic buyback condition that is triggered after a fixed period.
Redeemable shares include an automatic buyback condition that is triggered after a fixed period.
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A quorum can be formed even if the corporation’s rules usually require a specific quorum during SEC-ordered elections.
A quorum can be formed even if the corporation’s rules usually require a specific quorum during SEC-ordered elections.
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The corporation's secretary must report any director's death, resignation, or departure to the SEC within 7 days.
The corporation's secretary must report any director's death, resignation, or departure to the SEC within 7 days.
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A corporation cannot extend its corporate term more than three years prior to its expiry date.
A corporation cannot extend its corporate term more than three years prior to its expiry date.
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Dissenting stockholders have appraisal rights when the corporate term is changed.
Dissenting stockholders have appraisal rights when the corporate term is changed.
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Removal of a director without cause can deprive minority stockholders of their rights.
Removal of a director without cause can deprive minority stockholders of their rights.
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A stockholder can directly call for a special meeting if the secretary fails to do so after a demand.
A stockholder can directly call for a special meeting if the secretary fails to do so after a demand.
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A corporation's articles of incorporation may state that redeemable shares can only be issued when there are enough retained earnings.
A corporation's articles of incorporation may state that redeemable shares can only be issued when there are enough retained earnings.
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The intention to propose removal must be published by the secretary only if they are present.
The intention to propose removal must be published by the secretary only if they are present.
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A person who has been disqualified from being a director can still serve after five years.
A person who has been disqualified from being a director can still serve after five years.
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A corporation can sell its assets without any approval from its board of directors.
A corporation can sell its assets without any approval from its board of directors.
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At least twenty-five percent of the increase in capital stock must be subscribed before filing a certificate of increase.
At least twenty-five percent of the increase in capital stock must be subscribed before filing a certificate of increase.
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Nonstock corporations require a majority vote of the board of trustees and two-thirds of the members to incur bonded indebtedness.
Nonstock corporations require a majority vote of the board of trustees and two-thirds of the members to incur bonded indebtedness.
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The Commission will approve a decrease in capital stock even if it prejudices the rights of corporate creditors.
The Commission will approve a decrease in capital stock even if it prejudices the rights of corporate creditors.
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Bonds must be registered with the Commission, which determines their sufficiency.
Bonds must be registered with the Commission, which determines their sufficiency.
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A nonstock corporation can have members without voting rights.
A nonstock corporation can have members without voting rights.
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A corporation can approve a sale of most of its properties with a simple majority of stockholders.
A corporation can approve a sale of most of its properties with a simple majority of stockholders.
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At least twenty-five percent of the amount subscribed for an increase in capital stock must be paid in cash.
At least twenty-five percent of the amount subscribed for an increase in capital stock must be paid in cash.
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Study Notes
Revised Corporation Code of the Philippines
- Defines a corporation as an artificial being created by law with succession rights and powers granted by law.
- Differentiates between stock and non-stock corporations. Stock corporations issue shares and distribute profits, while non-stock corporations don't.
- Classifies shares based on rights, privileges, and restrictions specified in the articles of incorporation; not all shares have voting rights. Preferred or redeemable shares may not have voting rights.
- Non voting shares may nevertheless have the right to vote in specific situations
Corporations Created by Special Laws or Charters
- Primarily governed by the provisions of the special law.
- The Revised Corporation Code applies to fill in gaps where the special law does not.
Corporators and Incorporators, Stockholders and Members
- Corporators are the individuals or entities composing a corporation (stockholders/shareholders in stock corporations, members of non-stock corporations).
- Incorporators are the original stockholders/members who signed the Articles of Incorporation.
Minimum Capital Stock
- Stock corporations are not required to have a minimum capital stock unless specified by a special law.
Contents of Articles of Incorporation
- The Articles of Incorporation must include the corporation's name, purposes, principal office location, duration, names and addresses of incorporators, the number of directors/trustees, and other matters as required.
- Additional rules apply to banks, insurance companies, and other financial institutions
Amendment of Articles of Incorporation
- Requires majority approval from the board of directors and at least two-thirds of the outstanding stock.
- Details about the articles of incorporation and amendments, and special rules for certain corporations.
Corporate Term
- Corporations generally have perpetual existence, unless the Articles of Incorporation stipulate otherwise.
- Existing corporations can change or maintain their term with shareholder approval.
Corporate Name
- No name can be identical or too similar to a name already registered.
- The name must be distinct from similar names used by existing corporations.
Corporation by Estoppel
- Individuals acting as a corporation without proper formation are liable as partners for corporate debts.
- They can't use the lack of actual corporate existence as a defense.
Effects of Non-Use of Corporate Charter and Continuous Inoperation
- A corporation that fails to commence business within 5 years has its certificate revoked.
- Continued inactivity for an extended period can lead to the corporation being placed under delinquent status.
Board of Directors/Trustees and Officers
- The board manages the corporation's affairs and properties, with specific eligibility requirements.
- Directors or trustees are elected to terms specified in the by-laws.
Election of Directors or Trustees
- Stockholders have the right to nominate candidates for the board.
- Elections are typically conducted by ballot and require a majority of voting members or stockholders.
Corporate Officers
- The corporation elects specific officers like president, treasurer, and secretary.
- These officers manage the daily operations, and specific qualifications exist.
Election Reporting
- The corporation's secretary must report election details to the SEC.
- Reports are required within 30 days of election.
Disqualification of Directors, Trustees, or Officers
- Individuals convicted of serious offenses or found guilty of misconduct within five years of election are ineligible.
- Related legislation or administrative actions can also disqualify a candidate.
Removal of Directors or Trustees
- A two-thirds vote of the stockholders or members may remove a director or trustee.
- Specific procedures, including advance notice, are involved.
Compensation of Directors or Trustees
- Directors or trustees' salaries are generally determined by bylaws.
- The maximum compensation is limited to 10% of a certain measure/year, dependent on the structure of the corporation.
Liability of Directors, Trustees, or Officers
- Directors or officers are liable for any damages caused by unlawful or grossly negligent actions or acts of bad faith.
- They are responsible for the corporation's actions and financial health.
Contracts between Corporations
- Contracts between corporations with interlocking directors are not automatically invalid under specific conditions.
- The conditions for validity center on fairness, reasonability, and substantial interest level.
Power to Acquire Own Shares
- A stock corporation can buy back its own shares under specific circumstances, including resolving ownership fractional issues, settling debts, or compensating dissenting stakeholders.
Liability of Directors, Trustees and Officers and/or Corporate Term
- Provisions outline the liability of directors or trustees in cases of misconduct and/or failure to comply with the requirements related to corporate terms (e.g., lack of sufficient activity during the term period)
Voting Rights and Elections
- The right to vote is usually given to stockholders or members (in non-stock companies).
- Voting procedures may include proxy voting, and absentee voting
Bylaws
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Bylaws stipulate the internal governance of the corporation, addressing aspects like meetings, elections, and operations.
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Separate detailed guidelines and regulations apply to various aspects of private corporation procedures and legal requirements.
Minimum Capital Stock
- The minimum capital stock for stock corporations depends on the specific rules and regulations defined for the corporation, by special law.
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Description
Test your knowledge on the fundamental principles of corporate law. This quiz covers various aspects such as capital stock, stockholder meetings, and the nature of treasury shares. Perfect for students and professionals alike who want to enhance their understanding of corporate governance.
