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A corporation can be awarded moral damages under any circumstances.
A corporation can be awarded moral damages under any circumstances.
False
The doctrine of piercing the veil of corporate fiction allows the state to ignore the separate personality of a corporation for justified reasons.
The doctrine of piercing the veil of corporate fiction allows the state to ignore the separate personality of a corporation for justified reasons.
True
A private corporation's stocks can be sold at the stock exchange if its Articles of Incorporation includes the right of first refusal.
A private corporation's stocks can be sold at the stock exchange if its Articles of Incorporation includes the right of first refusal.
False
Incorporators are regarded as the organizers of a corporation.
Incorporators are regarded as the organizers of a corporation.
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A corporation by estoppel is considered a legitimate corporation in all respects.
A corporation by estoppel is considered a legitimate corporation in all respects.
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The Board of Directors in a stock corporation can consist of more than 15 members.
The Board of Directors in a stock corporation can consist of more than 15 members.
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Watered stocks refer to stocks issued for money or property less than their par value.
Watered stocks refer to stocks issued for money or property less than their par value.
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A representative suit is brought by a stockholder on behalf of the corporation.
A representative suit is brought by a stockholder on behalf of the corporation.
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Preferred shares of stock give holders priority in profit sharing over common share holders.
Preferred shares of stock give holders priority in profit sharing over common share holders.
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The Trust Fund Doctrine allows payments made on subscribed capital stock to be used for any corporate purpose.
The Trust Fund Doctrine allows payments made on subscribed capital stock to be used for any corporate purpose.
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Common shares of stock entitle the holder to share in profits before the holders of preferred shares receive their shares.
Common shares of stock entitle the holder to share in profits before the holders of preferred shares receive their shares.
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A merger results in one corporation absorbing another while still allowing the absorbed corporation to exist.
A merger results in one corporation absorbing another while still allowing the absorbed corporation to exist.
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The right of appraisal allows stockholders to demand payment for the fair value of their shares after dissenting from corporate actions.
The right of appraisal allows stockholders to demand payment for the fair value of their shares after dissenting from corporate actions.
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Statutory officers in a corporation typically include the roles of President, Treasurer, and Vice President.
Statutory officers in a corporation typically include the roles of President, Treasurer, and Vice President.
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A stockholder has the right to inspect corporate books and records.
A stockholder has the right to inspect corporate books and records.
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Study Notes
Corporation Characteristics and Attributes
- Corporations possess a separate legal personality distinct from its owners.
- Corporations have perpetual succession; they continue existing even if owners change.
- Corporations can acquire property, enter contracts, and pursue legal action.
- Corporations can jointly enjoy privileges and benefits.
Moral Damages to Corporations
- In general, corporations cannot receive moral damages because they are artificial legal entities.
- An exception exists if the corporation's reputation or goodwill is harmed.
Piercing the Corporate Veil
- The "doctrine of piercing the corporate veil" allows courts to disregard a corporation's separate legal personality under specific justifications.
Corporation Classifications
- Public Corporations: Organized by the state for public purposes, governed by specific laws.
- Private Corporations: Organized by individuals, typically for profit.
Public vs. Private Corporation Stock Sales
- Going Public: Corporations can sell stock on the stock exchange if their articles of incorporation don't contain a right of first refusal for existing stockholders.
- Going Private: Corporations may only sell stock to existing registered stockholders if their articles of incorporation include a right of first refusal.
- Right of First Refusal: Gives priority to existing shareholders in purchasing new shares of stock, preventing outsiders from acquiring shares.
Types of Private Corporations
-
Stock Corporations:
- Par Value Stock: Shares have a set value stated in the Articles of Incorporation.
- No-Par Value Stock: Shares don't have a stated value in the Articles of Incorporation.
- Sole Corporations: Often led by religious leaders, have legal corp. capacity
Corporations by Estoppel/Prescription
- Corporation by Estoppel: Not a true corporation, but those who interact with it as if indeed it is, are legally bound by it.
- Corporation by Prescription: Not a true corporation, but recognized as one due to the passage of time (like the Archdiocese of Manila).
Corporation Components
- Incorporators: Founders/organizers of the corporation who sign the Articles of Incorporation.
- Corporators: Stockholders (in stock corporations) or members (in non-stock corporations).
- Promoters: Facilitate the submission of documents to the Securities and Exchange Commission (SEC).
- Board of Directors (BOD): Stock corporations need at least 5 but no more than 15, non-stock corporations at least 5, but potentially more.
- Statutory Officers: President, Treasurer, and Secretary.
Board of Directors' Liability
- BOD members aren't liable if they act within their authority.
- Exceptions include:
- Assenting to unlawful acts.
- Acting in bad faith or gross negligence.
- Approving the issuance of watered stock.
Watered Stock
- Issued gratuitously or for less than its par value.
- Issued as dividends when no profits exist.
Corporate Opportunity Doctrine
- BOD members who are also stockholders in another company must act in the best interest of the corporation where they serve on the BOD.
Corporation Capital Structure
- Capital Stock: Agreed value in the Articles of Incorporation, divided into shares for subscription.
- Capital: Corporation's assets (money or property), including surplus and profits.
- Share of Stock: Unit of capital stock.
- Subscribed Capital Stock: 25% of the capital stock which has been purchased/subscribed.
- Paid-Up Capital: 25% of subscribed capital stock which is actually paid.
- Trust Fund Doctrine: Payments on capital stock intended solely for paying debts.
Stockholder Rights
- Voting Rights: Vote on matters concerning the corporation.
- Profit Sharing: Share in corporation's profits.
- Asset Distribution (Liquidation): Share in relevant assets after liquidation.
- Appraisal Rights: Demand payment for the fair value of shares if dissenting from proposed actions (amendments, asset sales, mergers/consolidations).
- Preemptive Rights: Stockholders get preferential right to purchase new stock before it's offered to outsiders.
- Inspection Rights: Access to corporate books and records.
- Election of BOD: Vote on the election of BOD
Dividend Declaration
- BODs must declare dividends when surplus or profits equal or exceed paid-up capital.
Types of Stockholder Suits
- Individual Suit: Lawsuit asserting a personal right of the stockholder.
- Representative Suit: Lawsuit on behalf of similarly situated stockholders with a shared complaint.
- Derivative Suit: Lawsuit on behalf of the corporation against the corporation, its BOD, stockholders or third parties due to an intra-corporate dispute.
Share Types
- Par Value Shares: Shares with a fixed value stated in the Articles of Incorporation.
- No Par Value Shares: Shares without a fixed value, but not issued below 5 pesos.
- Common Stock: Shares entitled to profits after preferred stockholders are paid.
- Preferred Stock: Shares with priority or advantage in profits compared to common stockholders.
- Shares in Escrow: Shares held by a bank due to ownership disputes.
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Description
Test your knowledge on the essential characteristics and attributes of corporations. This quiz covers topics such as legal personality, moral damages, and the concept of piercing the corporate veil. Discover the distinctions between public and private corporations as well.
