Corporate Structure and Legal Aspects

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Questions and Answers

What is the maximum duration a person may hold office in a corporation according to the provided content?

Five years (correct)

Seven years

Three years

Ten years

What is a key difference between 'incorporation' and 'organization' as described?

Organization presupposes that a corporation is already incorporated. (correct)

Incorporation refers to businesses, while organization refers only to non-profits.

Incorporation is strictly a legal term, while organization is a financial term.

Incorporation involves governmental approval, whereas organization does not.

Which of the following entities cannot be classified as a One Person Corporation?

Private limited company

Natural person

Trust company (correct)

Real estate agency

Which of the following is NOT a qualifying factor of a One Person Corporation?

Must be owned by a corporation Signup and view all the answers

Who qualifies to form a One Person Corporation according to the content?

A natural person only Signup and view all the answers

What constitutes an Affiliate Corporation as per the information provided?

A company with shared management or control Signup and view all the answers

Which type of company is restricted from being a One Person Corporation?

Publicly listed companies Signup and view all the answers

What is the legal significance of incorporators as mentioned in the content?

They are responsible for signing the Articles of Incorporation Signup and view all the answers

What is the minimum number of trustees for educational institutions organized as stock corporations?

Five Signup and view all the answers

What is the term length for a trustee elected in an educational institution organized as a non-stock corporation?

Five years Signup and view all the answers

When do one-fifth of the trustees' terms expire in an educational institution?

Every year Signup and view all the answers

What defines a holding corporation?

A corporation that owns a substantial portion of another company's voting shares Signup and view all the answers

How are trustees elected when filling vacancies in an educational institution?

For the unexpired period of the vacated term Signup and view all the answers

Which of the following describes a subsidiary corporation?

A corporation that has majority directors elected by another corporation Signup and view all the answers

What is the maximum number of trustees allowed for non-stock corporations?

Fifteen Signup and view all the answers

What happens to a trustee who is elected to fill a vacancy before the expiration of a particular term?

They hold office only for the unexpired period Signup and view all the answers

What is the primary purpose of the theory that a corporation is a distinct legal entity?

To serve the ends of justice Signup and view all the answers

Under what circumstances can the corporate veil be disregarded?

When it is used to justify wrongdoing Signup and view all the answers

Which of the following represents a common reason for piercing the corporate veil?

Shared customers between two corporations Signup and view all the answers

What is the key requirement of the three-pronged test for piercing the corporate veil?

The parent corporation's conduct must be unjust or fraudulent Signup and view all the answers

When is piercing the corporate veil considered appropriate?

When it causes harm to the plaintiff creditor Signup and view all the answers

Which of the following does NOT align with the principles allowing piercing the corporate veil?

The parent corporation operates entirely independently Signup and view all the answers

What legal outcome can occur when a corporate veil is pierced?

Owners can be held liable for corporate debts Signup and view all the answers

Which of the following best describes the role of the judiciary in relation to the corporate veil?

They determine when to disregard the corporate shield Signup and view all the answers

Under what conditions can a holding company be held liable for the acts of its subsidiary?

If control over the subsidiary is used to protect fraud or evade obligations Signup and view all the answers

What must be proven for courts to disregard the separate corporate personality of a subsidiary?

Evidence must show misuse of the subsidiary for wrongful purposes Signup and view all the answers

Which doctrine is involved when an individual uses a corporation for wrongful purposes?

Alter-ego doctrine Signup and view all the answers

What is meant by traditional veil-piercing?

It allows claimants to access individual assets by disregarding corporate entity Signup and view all the answers

Which of the following is NOT a reason for a court to pierce the corporate veil?

The company is experiencing financial difficulties Signup and view all the answers

Which of the following statements about corporate personality is true?

Separate corporate personality exists independently of ownership control Signup and view all the answers

What constitutes a sufficient ground for piercing the corporate veil?

Usage of corporate assets for personal gain under false pretenses Signup and view all the answers

Which scenario would likely lead to the court applying the alter-ego doctrine?

An individual transferring personal debts to a corporate entity Signup and view all the answers

What must happen if a dividend is omitted for cumulative preferred shares in a given year?

It must be made up in a later year before any other dividends are paid. Signup and view all the answers

What is the minimum value that no-par value shares can be issued for?

Five pesos Signup and view all the answers

Which of the following types of shares can be deprived of voting rights?

Redeemable shares Signup and view all the answers

Under what condition may redeemable shares be redeemed?

Only if the corporation is solvent and can meet its debts. Signup and view all the answers

What happens to redeemable shares when they are reacquired by the corporation?

They are considered retired and cannot be issued again unless specified. Signup and view all the answers

Which statement best reflects the conditions for issuing non-voting shares?

They must have preferred shares with full voting rights. Signup and view all the answers

Which entity can be held liable in favor of the corporation regarding preferred shares?

No liability can be imposed on the corporation for shares issued. Signup and view all the answers

What must be ensured regarding the redemption of shares and corporate assets?

There should be sufficient assets to cover debts even after redemption. Signup and view all the answers

Study Notes

Religious Corporation

A religious corporation is related to another by common ownership, management, or control through long-term leases or other control devices.

One-Person Corporation

A single stockholder can form a one-person corporation
Trusts and estates can also form a one-person corporation.
Natural persons can form one-person corporations except the following:
- banks and quasi-banks
- pre-need companies
- trust companies
- insurance companies
- public and publicly listed companies
- non-chartered GOCCs
- natural persons licensed to practice professions

Doctrine of Piercing the Corporate Veil

A corporation is a separate legal entity from its owners.
Courts disregard this separation when the corporate fiction is used for fraudulent activities, to evade legal obligations, or for criminal purposes.

Three-Pronged Test for Piercing the Corporate Veil

Control over the subsidiary corporation
Control used for fraud or gross negligence to protect the parent corporation
Fraud as the proximate cause of injury

Holding Corporation

A corporation that owns or is organized to own a substantial portion of another company's voting shares to influence its management, policies, and affairs through election of the board of directors.

Subsidiary Corporation

A company related to another where the majority of directors are elected directly or indirectly by the other corporation..

Board of Trustees

The number and term of directors for non-stock corporations is determined by the provisions governing non-stock corporations, with a minimum of 5 and a maximum of 15.
Trustee numbers must be in multiples of five.
The term of office for trustees is five years.
One-fifth of the total number of trustees' terms expire each year.
Trustees elected to fill vacancies hold office for the unexpired term, no more.

Preferred Shares

A preferred share may be deprived of voting rights only when it is classified as "preferred" or "redeemable" by the corporation
There must always be shares with full voting rights.
Non-voting shares may vote in the matters enumerated in Section 6 of the corporation code

Non-Par Value Shares

Issued for a consideration of at least P5.00 per share.
The entire consideration received by the Corporation for its no-par value shares is treated as capital and is not available for dividend distribution.

Redeemable Shares

Can be redeemed regardless of the existence of unrestricted retained earnings.
The corporation must have enough assets to cover debts and liabilities after redemption.
Redemption cannot be made when the corporation is insolvent or will become insolvent after redemption.
When redeemable shares are reacquired, they are retired and not re-issuable unless specified in the Articles of Incorporation.

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Description

This quiz covers essential concepts regarding religious corporations, one-person corporations, and the doctrine of piercing the corporate veil. It explores the legal distinctions and implications of corporate structures, as well as the conditions under which courts may disregard corporate separateness. Test your knowledge on these fundamental legal principles.