Corporation Law Defnition - A corp corpor orat atio ion n is an arti artifc fcia iall bein being g crea create ted d by operation o law having the right o succession and the powers, attributes and properties expressly authorized by law or incident to its existence. brea!down" #. created by law $. %aving the right o succession &. 'osses ossesse ses s powe powers, rs, attri attribu bute tes s and and prop proper erti ties es authorized by law or its articles o incorporation or that that which which is inher inherent ent and incide incidental ntal to its existence Conse(uences o being a separate pers onality" -'roperty .it is entitled to properties o its own .prope .properti rties es it owns owns are not that that o the stoc!hold stoc!holders, ers, directors and o)cers .the .the inte interrest est o the the *D+ *D+s s over over the the corp corpor orat atio ions ns properties are erely inchoate -+bligations .the obligations o the corporation are not that o the *D+s and vice versa
-ights .rights exercised by the corporation cannot be invo!ed by the *D+s and vice versa e.g. the right o the *D+s against unreasonable searches and seizures cannot be invo!ed by the corporation since the right is personal with respect to the individuals -Constitutional ights .corporations are still entitled to certain constitutional rights rights"" the right right agains againstt unreaso unreasonab nable le searche searches s and seizures /since it is considered as a person by fction o law0, Due process. *oe rights that cannot be invo!ed by the the corp corpor orat atio ion n e.g. e.g. the the righ rightt agai agains nstt sel sel-incriination -1orts .the .the corp corpor orat atio ion n is liab liable le or or tort torts" s" when when the the act act coitted by the o)cer or agent is by the express direction or authority o the stoc!holders or ebers acting as a body /Directors0. -2ationality .1he .1he general general rule a corporat corporation ion is a nation national al o the coun countr try y whe where its its was inco incorp rpor orat ated ed /'la /'lace ce o 3ncorporation 1est0 4in the instance o war /public eney0- the nati nation onal alit ity y o a corpo corporat ratio ion n is dete deter rin ined ed by the the nationality o the controlling stoc!holders /Control 1est0
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4investent purposes- /oreign investent act o #<<#0 =" when is a corporation deeed a 'hilippine 2ational> A" #0when the corporation has been organized under oreign law $076? o the outstanding capital stoc! entitled to voted is owned@held by flipino citizens &0when the corporation is organized abroad the sae ust be registered as doing business in the 'hilippines under the corporation code and #66? o the outstanding capital stoc! entitle to vote belongs to flipino citizens. 2+1:" where a corporation and its non-flipino stoc!holders owns stoc!s in a *:C registered enterprise, at least 76? o the outstanding capital stoc! entitled to vote, each o both corporations ust be held or owned by flipino citizens including 76? o the Board o each o the corporations ust consist o flipino citizens. 1he rand ather ule -percentages shares held by the $nd corporation in the #st corporation is ultiplied to the latters own flipino e(uity, the product thereo will represents the true flipino ownership.1his rule is applied when the owning corporation, the flipino e(uity
thereo is less than 76? o the outstanding capital stoc! entitled to vote. Conse(uences o being an artifcial being -Action" the corporation can only act through its directors, o)cers and eployees. -Criinal Liability" the corporation is incapable o alice thereore it cannot be held liable or elonies under the evised 'enal Code. Corporations cannot coit cries under special law because such are personal in nature. 1he penalty o iprisonent cannot be iposed as a conse(uence o the corporation being and individual created by fction o law, however the sae aybe dissolve in the case o violation under the Corporation Code. 3 the crie is coitted by a corporation or other Euridical entities, the directors, o)cers and eployees or other o)cers thereo responsible or the coission o the oFense shall be charged and penalized or the crie. A corporation ay not be arrested and iprisoned. -;oral Daages" A corporation Cannot be awarded oral daages because such does not have eelings and a ental state, ental suFering ay only be experienced by one having a nervous syste, nor can
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the corporation clai oral daages or a besirched reputation /2'C vs 'hilipp Brothers +ceanic 3nc.0. %owever, the corporation ay recover oral daages under art. $$#80 i it was a victi o GdeaationH.
:xaples where the doctrine o Gpiercing the veil o corporate fction was applied" #. evading obligations to eployees or pretext to disiss eployees $. :vade lawul obligations or oney Eudgent &. 1he corporation is a ere alter ego, adEunct, or business conduit by doinating o)cers and stoc!holders I. 9sed to deeat public convenience J. 9sed to Eustiy a wrong 7. 9sed to protect raud 8. 9sed to deend crie K. 9sed to conuse legal and Eudicial issues <. 9sed to perpetuate deception or to circuvent the law
=" what do you understand by the doctrine o piercing the veil o o corporate entity> A" Gthe veil o corporate entityH eans that the corporation has a separate and distinct personality ro that o the persons coposing, however when the veil o corporate fction 3 used as a shield to perpetuate raud, to deeat public convenience, and Eustiy a wrong or deend a crie, the sae shall be disregarded and the individuals coposing the corporation will be treated identically. /also the corporate veil cannot be used or a blatant violation on the prohibition against oru shopping0. 2ote" Although there are instances when a corporation aybe held liable or the obligations o stoc!holders or o)cer under the doctrine o piercing the veil o corporate fction, the sae doctrine cannot be used to support an action or the enorceent o obligations o Directors, o)cers and incorporators /rancisco vs CA0. 1he doctrine is norally invo!ed to a!e directors, o)cers and shareholders liable or the obligations o the corporation.
=" what are the circustances that aybe considered to Eustiy the application o the doctrine to a!e parent corporation liable or the obligations o its subsidiary> A" A cobination o or all o the ollowing /'2B vs itratto roup 3nc.0
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#. parent corporation owns all or ost o the capital stoc! o the subsidiary $. 'arent and subsidiary have coon directors or o)cers &. 1he parent fnances the subsidiary
I. 1he parent subscribes to all o the capital stoc! o the subsidiary or causes or its incorporation J. 1he subsidiary has grossly inade(uate capital 7. 1he subsidiary has substantially no other business other than the parent or has no other assets except those conveyed to or by the parent corporation 8. 3n the papers o the parent the subsidiary is described as a departent or division or that its business responsibilities are reerred by the parent as its own K. 'arent uses the property o the subsidiary as its own <. 1he directors and executives o the subsidiary ta!e orders ro the parent /dependent, and act not o their own interest0 #6. oral legal re(uireent o the subsidiary not observed =" is ownership o a substantial portion o the corporation enough to Eustiy the application o the doctrine> A" 2o, ;ere single ownership by a single stoc!holder or by another corporation o all or nearly all o the capital stoc! o the corporation does no Eustiy the application o the doctrine. the other circustances ust be present /rancisco v ;eEia0
:leents that ust be present to Eustiy application o doctrine" #. Control- eans coplete and total doination, not ere stoc! control, such that the corporate entity has no separate ind or existence o its own. $. *uch control ust have been utilized to coit raud or wrongdoing, to perpetuate violative or unEust act in contravention to a legal right &. 1he control ust have proxiately caused the inEury or loss coplained C:A1:D B5 +':A13+2 + LA Concession 1heory" concession- grant o privilege 1he theory that the existence o the corporation as an artifcial creature is dependent on the ipriatur o the senate acting through the *:C. 1he lie o a corporation is a concession ade by the state. A2C%3*:* + C+'+A13+2
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#. 'riary, corporate or general ranchises- the priary ranchise o a corporation, that is right to exist as such is vested in the incorporators and
not the corporation itsel. 3t cannot be transerred without approval o congress $. *pecial@secondary ranchises- the rights conerred upon existing corporations such as the right to use streets o the unicipality, lay pipes o trac!s, erect poles or string wires or to engage in delivery service.
1he capacity to have continuity o existence despite the changes in the persons who copose it, thus personality continues even with the change o stoc!holders, ebers, board ebers or o)cers. '+:*, A113B91:*, A2D '+':13:* A0 theory o special Capacities@Liited capacity doctrine - the corporation shall only possess and exercise powers those that are expressly authorized by the law, its articles o incorporation or that which are inherent, incidental to its existences /derivative0.
1hese special or secondary ranchises aybe conveyed or ortgaged under a general power granted to a corporation to dispose o its property, except such special or secondary ranchises as charged with public use. 1he sae is subEect to levy@execution together and including all property necessary or the enEoyent thereo. %+ A: C+'+A13+2* C:A1:D" #. eneral law- private corporations are created generally under the corporation code. $. *pecial Law- public corporations are created by special laws. 'rivate corporations cannot be created by special laws, except" +CCs /which actually private corporations0 3%1 + *9CC:**3+2
+rganizer s
unctions
overnin g laws
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'rivate
'ublic
state
'rivate persons@ state
ovt o a portion o the state *pecial Law@LC
'roft a!ing Law on 'rivate Corporation
$. An attept in good aith to incorporate &. 9se o corporate powers
s
Legal status
Classifcation
2ote" the issuance o certifcate o incorporation by the *:C is a re(uireent or continued good aith
De Mure
3 there is substantial copliance the result is a de Eure corporation only colorable copliance results in a de acto corporation.
De acto
:xistence *toc! o stoc!s Laws o Doesti incorpora c tion
2on*toc! oreign
B0 3 the act o the corporation is not within those those express, iplied or incidental powers, the act is ultra vires /separate activities at odds w@ its charter@invalid and in excess o power or authority0 De Eure- corporation organized in accordance with the law De acto- a corporation where there exists a Naw in its incorporation. 1he re(uisites or existence are" #. existence o incorporated
valid
law
o
which
it
aybe
*toc! Corporation- corporation with capital stoc! divided into shares and is authorized to distribute to holders thereo dividends or allotent o surplus profts on the basis o shares held. 2on-stoc! Corporation- a corporation which does not issue stoc!s and does not distribute dividends to their ebers Corporation by estoppel- a group o persons which holds itsel as a corporation and enters into contracts with third persons on the strength on such appearance is not allowed to deny its existence in an action under said contracts. Corporation by 'rescription- a corporation that was not orally organized as such but has been duly recognized by ieorial usage as a corporation with
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rights and duties aintainable at law e.g. oan Catholic Church +ther Corporations" #. Close Corporation $. *pecial Corporation &. :ducational Corporation I. eligious Corporation a0 Corporation sole b0 eligious societies Corporations going public- when the corporation decides to lists its share in the stoc! exchange. 3nclude corporations that will a!e initial public oFering o its shares. Corporations going private- when the corporation would restrict the shareholders to a certain group. 3n a sense includes closely held corporations. eal :state 3nvestent 1rust- a stoc! corporation which operations involve the owning o incoe generating real estate assets.
;ere ;anner o agreeen Creation t O o +rganizer s
$ or ore
'owers
As aybe agreed by the partners
Liited personality
+rganizer Authority
;utual Agency
2o agency
;ust be 1ranser o with interest consent o partners 2o right *uccessio o n successio n
;aybe without consent @ right o succession
De acto vs De Mure Corporations
De Mure
Corporation vs 'artnership 'artnershi p
certifcate + incorporatio n ;iniu o J axiu o #J
Corporation
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De acto
Created in strict conority w@ statutory re(uireents
Actually exists or practical purposes as a corporation but w@o legal right to corporate existence as against the state ight to exist ight to exist cannot be can be successully successully attac!ed even attac!ed in a in a direct direct proceeding by proceeding by the state the state /=uo arranto0
Coponents + A corporation 3ncorporators- those who originally or@copose the corporation whose naes appear on the articles o incorporation ac!nowledged by a notary public #.ust be natural persons $.At least J but not ore than #J &.+ legal aage I.;aEority are residents o the philippines J.:ach ust subscribe or own atleast on share
Corporators- all the stoc!holders and ebers o the corporations *toc!holders and ebers- those who hold or own shares in a stoc! corporation the latter copose the non-stoc! corporation Directors and trustees- Directors is the governing body in a stoc! corporation while trustees is the governing body in a non-stoc! corporation 'rooter- help ventures attract investors, ors a corporation and launches its business with the view o prootion o profts. Corporators vs 3ncorporators 43ncorporators #. signatory to articles $. Do not cease to be as such &. 2uber is liited ro J to #J I. ;ust have contractual capacity 4Corporators #.*toc!holder o a stoc! corporation and eber o a non-stoc! corporation $.Cease to be such i no longer stoc!holders or ebers &.2o restriction as to nuber
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I.;aybe such through a guardian I. upto I6? oreign *toc!holders =" can all the stoc!holders in a corporation be oreigners> A" yes, except corporations
in
ully
or
partly
-realty copanies and other corporations that own private lands -+peration and anageent o public utilities -AdEustent copanies
nationalized
:xaples o ully or partly nationalized corporations"
J. upto 76? -fnancing copanies -investent houses
#. where no oreign stoc!holder is a llowed" Corporators vs incorporators -ass edia except recording -retail trade business with paid up capital o less than 9*P $.J; -private security agency -*all scale ining -coc!pits $. upto $6? oreign e(uity -private radio counications networ! &. upto $J?
Corporators *toc!holder@e ber o stoc! corporation@ nonstoc! corpo Cease to be such i they are no longer stoc!holders 2o restriction as to nuber
-private recruitent /whether local@overseas -Construction o deense related structures
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3ncorporators *ignatory articles incorporation
to o
Do not cease to be such 2uber liited ro J to #J
;aybe be through guardian
8. *toc! corporation" aount o authorized capital stoc!
such ith contractual his capacity
K. 'ar value o each share /stoc! corporations0
+;A13+2 + A C+'+A13+2
<. 2uber o shares and aounts o subscriptions o subscribers which is not less than $J? o authorized capital stoc!
1he lie o a corporation coences ro the issuance o the certifcate o registration ro the *:C upon the fling o the articles o incorporation and other docuents.
#6. Aount paid by subscriber on their subscription which shall be not less than $J? o the subscribed capital and not less than J,666
Articles + 3ncorporation Contents"
##. 2ationalized industry" stateent Gno stoc! will be allowed i it will reduce stoc! ownership o flipinos below the legal re(uireent
#. nae o the corporation $. 'urposes priary and secondary
Docuents fled with or the issuance o the Certifcate + egistration
&. 'lace o principal o)ce I. 1er J. 2aes, citizenship, incorporators
residences
o
the
7. 2aes, citizenship, residences o the directors
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#. Articles + 3ncorporation $. 1reasurers certifcation" $J? o the authorized capital stoc! is subscribed and $J? have been ully paid in cash or property &. Ban! certifcate covering the paid up capital I. Letter Authority" authorizing the *:C exaine ban! deposit, boo!s and records to deterine existence o paid-up capital
J. 9nderta!ing to change the corporate nae in case the sae was registered previously by another person 7. Certifcate o Authority ro proper governent agency wherever appropriate. hat corporate nae cannot be used> -those deceptively, deceivingly siilar to that o any existing corporation -nae already protected by law -nae contrary to public orals or policy *ignifcance o the principal place o business -'rincipal place o business deterines the venue o court cases involving corporations ;axiu 1er o Corporations -the axiu ter o corporation is J6 years -ay be extended or a period not exceeding J6 yrs -enewal" shall no be earlier than J years prior to the expiration o the J6 year ter. 1:;*"
Aount that is fxed in the articles o incorporation, that is to be subscribed and paid or by the stoc!holders o the corporation. *ubscribed Capital" 'ortion o the authorized capital stoc! covered by subscription agreeents, whether or not ully paid 'aid-up Capital" 'ortion o the capital stoc! which has been subscribed and actually paid +utstanding Capital *toc!" 1otal shares o stoc! issued to subscribers whether or not ully paid. Capital" 'roperties and assets o the corporation that are used or business and operation. Aendent o the Articles + 3ncorporation 'rocedure" -;aEority vote o the directors@trustees -ritten assent o stoc!holders representing $@& o the outstanding capital or $@& o ebers in a non-stoc! corporation
Authorized Capital *toc!" hen :Fective"
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-upon approval o the *:C -non action o *:C" 7os ater the date o fling. 'rovided" delay is not attributed to the corporation Congress" -Congress ay pass statutes aending the Articles o incorporation provided that no vested right is ipaired /*ec #IJ, CC'0 *uspention@Cancellation o Certifcate o egistration" /;-3-B+0 -A9D in procuring registration -serious ;3*:':*:21A13+2 as to obEectives o the corporation -eusal to coply with the lawul order o t he *:C -continuous 32+':A13+2 or atleast J years -ailure to fle B5-LA* -ailure to fle 3L: :'+1* -+1%: siilar grounds B5-LA*- relatively peranent and continuing rules o the corporation, intended or the individuals coposing it and those that ta!e part in the anageent o corporate aFairs.
-consistent with the corporation pertinent rules and regulations
code
and
other
-ust reasonable and not arbitrary -ust not disturb vested rights@property rights o stoc!holders@ebers, ipair contracts or create obligations un!nown to law no absolute restriction on the right to transer interest ust not underine the security o tenure o an eployee /salaranca vs 'hilaLie0 Adoption Q Aendent" A0 +riginal By-Laws -aybe fled along with the fling o the Articles o 3ncorporation or -fled # onth ater the notice o issuance o the certifcate o incorporation, 'rovided"
e(uisites" -ust be consistent with the Articles + 3ncorporation
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#.the sae is approved by the aEority o the stoc!holders@ebers constituting a aEority o the outstanding capital stoc! $.Copy is fled with the *:C, /signed by the approving stoc!holders@ebers, certifed by a aEority o the aEority o the
directors@ebers, corporate secretary0
countersigned
by
the
2+1:" the non-fling o the by-laws within one onth is a ground to oreit the ranchise but will not result to an autoatic dissolution B0 Aendent -aybe ade by the stoc!holders together with the board or the board only. #. *toc!holders R Board ;ebers" aEority o the board and aEority o the stoc!holders/ representing te outstanding capital stoc!0 $. Board +2L5" as delegated by $@& o the stoc!holders representing aEority o the outstanding capital stoc! or $@& aEority o ebers
B0 as to third persons" it is not binding against & rd persons, S'2" when there is actual !nowledge. /&rd persons are not even bound to investigate the content o the by-laws because they are provisions or governent o the corporation, 2+13C: 1+ 1%:; 3LL 2+1 B: ':*9;:D0 '+:* + 1%: C+'+A13+2 Tinds" #. :xpress- those that have been provided or@authorized by law and its articles o incorporation or charter. $. 3plied- those that can be inerred ro the exercise o express powers &. 3ncidental- incidental to the existence o the corporation :xpress 'owers 9nder the Corporation" /**-AAA-3@A-D:D-:+0
Binding eFect o the 'rovisions o the By-Laws A0 as to the corporation and its coponents" binding upon the corporation but also on its stoc!holders, ebers and those o)cers having direction, anageent and control o its aFairs.
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#. $. &. I. J.
to sue and be sued *uccession Adopt and use corporate seal Aend Articles o 3ncorporation Adopt, aend, repeal by-laws
7. *toc! corporation- issue stoc!s to subscribers and to sell treasury shares non-stoc! corporationadit ebers 8. Deal with real and personal property pursuant to its lawul business K. :nter into erger and consolidation <. ;a!e reasonable donations or publice welare, charitable and cultural purposes /prohibition" partisan political party0 #6. :stablish pension, retireent and other plans or the beneft directors, o)cers, trustees and eployees ##. +ther essential powers necessary to carry out its purposes
#6. Aend the Articles + 3ncorporation 9ltra Uires Acts" are acts coitted outside or beyond the powers granted@authorized by the law, the articles o incorporation or charter. 9ltra Uires Acts vs 3llegal Acts" -9ltravires acts are erely voidable which ay still be enorced by" perorance, ratifcation or estoppel -3llegal Acts" are void and cannot be validated :Fects o an 9ltra Uires Act
*pecifc 'owers" /:33-DC'-3D;A0 #. $. &. I. J. 7. 8. K. <.
power to extend or shorten corporate ter 3ncrease@decrease corporate stoc! 3ncur@create bonded indebtedness Deny pre-eptive right *ell, dispose, Lease, encuber all or substantially all o the corporate assets 'urchase or ac(uire own shares 3nvest in another corporation, business other than the priary purpose Declare dividends :nter into ;anageent Contract
#. executed contract- courts shall not set aside or interere with such contracts $. :xecutory contracts- shall not be given any eFect, even at the suit o either party &. 'artly executed and executory- principle o unEust enrichent shall apply. Distinguished with acts that do not coply with oralities -An act that does not coply with the oralities prescribed is not an ultra vires act /e.g. non copliance with the by-laws prescribing a procedure in entering into contracts0
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Distinguished ro unauthorized acts -the act aybe within the powers o the corporation but not the o)cer /9L1A U3:* AC1 + 1%: +3C:0. ho ay exercise the powers o the corporation> -eneral ule" the board alone without the need o concurrence o the stoc!holders@ebers ay exercise corporate powers, the decision o the stoc!holders do not overrule that o the board.
I. Aendent@repeal o a board resolution which by its ters cannot be aended@repealed J. 1he distribution o cash dividend 1he executive coittee" coposed o at least three /&0 ebers coing ro the board. 1he executive coittee is created under the by-laws 2+1:" the board by itsel cannot create an executive coittee under section &J o the corporation code, the board however, ay create an executive coittee to %:L' in the anageent o the aFairs o the corporation.
'owers not exercise by the board alone" #. there is a anageent contract $. 1he powers o the board is delegated to a aEority vote o an executive coittee roup o directors appointed to act on behal o, and within the powers granted to the by, the board o directors. hat are the powers that cannot be exercised by the :xecutive Coittee> #. approval o an action needing the concurrence o the stoc!holders $. flling in vacancies in the board &. Adoption, aendent, repeal o by-laws
-in other cases, the other corporate o)cers ay bind the corporation li!e the president. 1he authority o such individuals to bind the corporation is generally derived ro" 3. Law 33.by-laws 333.authorization ro the board either expressly or ipliedly by habit, custo,ac(uiescence in the course o business -or a corporate o)cer@agent to bind & rd persons and the corporation" A91%+315 to do so ust have been conerred to hi -an o)cer ay also bind the corporation i he has apparent authority. 3t is derived not erely ro practice, its existence aybe ascertained through"
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#. general anner in which the corporation holds out its agent@o)cer having the power to act. $. 1he ac(uiescence in his acts o a particular nature, with actual or constructive !nowledge thereo, within or beyond the scope o his ordinary powers. 3nstances when the concurrence o the stoc!holders is necessary or the exercise o the powers o the corporation":33@DC@3D;A A0 approval o the aEority o the board and the concurrence o the board representing $@& o the outstanding capital /or $@& o the ebers, whenever applicable is necessary" /:33-DC-3D;A0 2+1:" the sae powers as the specifc powers however the denial o pre-eptive right is not included and, declare dividends" stoc!. notes" anageent contract - a agreeent under which operation control o an enterprise is vested by contract with a separate enterprise that perors the necessary anagerial unctions in return o a ee. to enter into a anageent contract" #. stoc!holder@s representing the sae interest o both anaging and the anaged corporation sown or control ore than #@& o total
outstanding capital entitled to vote in the anaging corporation or $. ;aEority o the ebers o the board o directors o the anaging corporation also constitute a aEority o the ebers o the board o the anaged corporation B0 Approval o the stoc! holders representing aEority o the outstanding capital is necessary together with the board approval in the ollowing circustances" #. to enter into a anageent contract i any o the two insances entioned above are absent $. Adopt, aend, repeal the by-laws C0 without board resolution, the st oc!holders ay by" #. $@& outstanding capital- delegate to the board the power to aend by-laws $.aEority o outstanding capital- revo!e the power o the board to aend the by-laws which was previously delegated. 3nstances when the corporation ay ac(uire its own shares" -the corporation has unrestricted retained earnings in its boo!s to cover the shares to be purchased.
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-or legitiate corporate purposes including but not liited to the ollowing" #. eliinate fctional shares arising out o stoc! dividends $. Collect@coproise and indebtedness to the corporation arising out o unpaid subscription and to purchase delin(uent shares sold during the sale &. 1o pay dissenting@withdrawing stoc!holders entitled to the payent o their shares. D3U3D:2D*
-the declaration o dividends is discretionary -payable only when there are profts by the corporation -even i there are profts the B+D has the discretion whether or not to issue dividends S'2" surplus profts are prohibited to be retained by stoc! corporations in excess o #66? o their paid-up capital S'2 to the c!in S'2" even i retained surplus profts is in excess o #66? o the paid-up capital o the corporation, the board ay still reuse to declare dividends, i"
A0 ho ay declare dividends> 1he B+D alone- cash and property dividends B+D with the approval o stoc!holders representing not less than $@& o the outstanding capital- *1+CT dividends
a0 Eustifed by corporate expansion approved by he board b0 Corporation is prohibited by a load agreeent with a fnancial institution@by a creditor to issue dividends without its consent c0 etention is necessary under special circustances e.g. need or special reserve or probable contingencies
B0 what are the conditions that ust be present to declare dividends> #. unrestricted earnings $. esolution o the board or i stoc! dividends the concurrence o $@& o the outstanding capital. C0 can the board be copelled to declare dividends>
Dividends cannot be declared out o the capital, :xceptionasting assets corporation- corporations engaged in the exploitation o wasting assets /wasting assetsVproperty@security that has liited lie and loses value over its lie
*ources" eviewer on Coercial Law by A(uino - *undiang Corpo - A *tudents *5 $6#7-$6#8 *9''+1 *5*1:;
#. Dividends ro investents in wasting assets $. Li(uidating dividends hat can be included in the unrestricted retained earnings> -accuulated profts@gains realized out o the noral and continuous operations ater the deduction o distributions to stoc!holders and transers to capital stoc!@other accounts -surplus profts are a condition precedent to the declaration dividends 3tes not available or dividend declaration" a0 unrealized oreign exchange gains b0 *hare@e(uity in net incoe o the associate@Eoint venture c0 air value adEustent d0 ecognized deFered tax asset e0 'aid-in-surplus 0 evaluation surplus g0 eduction surplus -ains ro the sale o real properties o the corporation can be considered as part o retained earnings provided that there is surplus profts, the corporation cannot issue gains ro the sale o its real properties as dividends i the value o the reaining
assets ater distribution is less than the aount o legal@stated capital and liabilities. -treasury shares aybe issued as property dividend. 1hey cannot be issued as stoc! or cash dividends because they are not part o earned or surplus profts. 1:A*95 *%A:* aybe declared as property dividends to be issued out o the retained earnings previously used to supporttheir ac(uisition '+U3D:D" the aount o the said retained earnings has not been subse(uently ipaired by losses. -+ther rules concerning dividends" dividends are based on the total nuber o shares and not on the aount paid or the shares. stoc!holders at the tie o the declaration o the dividends are entitled to dividends those declared ater transer the owner shall be the transeree those declared beore transer the owner is the transeror stoc!holders right to be paid dividends accrues ro the oent o declaration, ro then on he ay already deand payent stoc! dividends can be declared at a preiu /at a value higher than par0 even unpaid subscribers are entitled to payent o dividends
*ources" eviewer on Coercial Law by A(uino - *undiang Corpo - A *tudents *5 $6#7-$6#8 *9''+1 *5*1:;
*AL: + ALL + *9B*1A213ALL5 ALL '+':13:* :=93*31:*" #. Approval o aEority o the directors or trustees $. Assent o $@& stoc!holders@ebers in a eeting &. ;ust coply with the oralities o the bul! sales law hen is the sales deeed to be all or substantially all> -when such sale renders the corporation incapable o continuing operations or the purpose or which it was incorporated
:Fect on creditors" -the transeree@buyer o all or substantially all the assets/or even shares0 will not be liable or the debts o the transeror S'2*" a0 is there is a n express assuption o liabilities b0 1here is a consolidation or erger c0 1he purchase was in raud o creditors d0 1he purchaser becoes the continuation o the seller
*ources" eviewer on Coercial Law by A(uino - *undiang Corpo - A *tudents *5 $6#7-$6#8 *9''+1 *5*1:;