Week 12 Corporation
Week 12 Corporation
Week 12 Corporation
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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
e. To demand payment in the exercise of appraisal right (Secs. 40, 81
RCC)
Obligations of a stockholder
Regular Meeting
Venue
NOTE: Any city or municipality in Metro Manila, Metro Cebu, Metro Davao, and
other Metropolitan areas shall, for purposes of this section (Sec. 50, RCC) be
considered a city or municipality.
Non-stock corporations – Any place even outside the place where the
principal office of the corporation is located, as long as within Philippine
territory and proper notice is sent to all members.
Notice- The notice of meetings shall be in writing, and the time and place
thereof stated therein. The written notice of regular meetings may be sent
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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
through electronic mail or such other manner as the commission shall allow
under its guidelines. The notice shall be sent to the stockholder or member:
Special Meeting
Venue: In the principal office of the corporation as set forth in the AOI, or if not
practicable, in the city or municipality where the principal office of the
corporation is located. Provided, that Metro Manila shall be considered a city
or municipality
Notice – The notice shall be in writing and the time and place thereof stated
therein. The notice shall be sent to the stockholder or member:
The term “proxy” designates the formal written authority given by the owner
or holder of the stock, who has the right to vote it, or by a member, as
principal, to another person, as agent, to exercise the voting rights of the
former.
Purposes of Proxies:
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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
Duration of Proxy
a. Specific Proxy – authority granted to the proxy holder to vote only for a
particular meeting on a specific date
b. Continuing Proxy – authority granted a proxy to appear and vote for and
on behalf of a shareholder for a continuing period which should not be
more than five (5) years at any one time
Extent of Authority
Other purposes:
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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
2. To assure continuity of policy and management especially of a new
corporation desirous of attracting investors
3. To enable the owners of the majority of the stock of the corporation to
control the corporation
4. To vest and retain the management of the corporation in the persons
originally forming it
5. To prevent a rival concern from acquiring control of the corporation
6. To carry out a proposed sale of the corporation’s assets and to facilitate
its dissolution
7. To enable two holding companies to operate jointly a corporation
controlled by them
8. To effect a plan for reorganization of a corporation in financial difficulty
or in bankruptcy proceedings
9. To aid a financially embarrassed corporation to obtain a loan and
protect its creditors
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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
A trustee can vote and exercise all A proxy can only vote in the
the rights of the stockholder even absence of the stockholder
when the latter is present
Term or duration
An agreement must not exceed 5 A proxy is usually shorter duration
years at any one time except when although under Sec. 58 it can be for
the same is made a condition of loan a longer period not to exceed 5
years at any one time
Governing law
Governed by the law on trust Governed by the law on agency
Right to inspect
A trustee has the right to inspect A proxy does not have a right of
corporate books inspection of corporate books
IV. RIGHT TO DIVIDENDS -It is the right of the stockholder to demand payment of
dividends after the board’s declaration. Stockholders are entitled pro rata
based on the total number of shares that they own and not on the amount paid
for the shares.
EXPN: In case a record date is provided for. A record date is the date fixed in the
resolution declaring dividends , when the dividend shall be payable to those
who are stockholders of record on a specified future date or as of the date of
the meeting declaring said dividend.
Requisites:
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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
NOTE: In case of disagreement, the value will be determined by appraisal
of 3 disinterested persons (Sec. 81, RCC)
(5) The corporation has sufficient unrestricted retained earnings. The Trust
Fund Doctrine backstops the requirement of URE to fund the payment of
the shares of stocks of the withdrawing stockholders.
a. In case any amendment to the AOI has the effect of changing or restricting
the rights of any stockholder or class of shares, or of authorizing
preferences in any respect superior to those of outstanding shares of any
class, or of extending or shortening the term of corporate existence.
d. In case of investment of corporate funds for any purpose other than the
primary purpose of the corporation
(1) Once the dissenting stockholder demands payment of the fair value of his
shares:
- All rights accruing to such shares including voting and dividend rights
shall be suspended; and
- GR: He is not allowed to withdraw his demand for payment of his shares
EXPN: Unless the corporation consents thereto
(2) If the dissenting stockholder was not paid the value of his shares within 30
days after the award, his voting and dividend rights shall be immediately
restored until payment of his shares. (Sec. 82, RCC)
(3) Upon payment of the stockholder’s shares, all his rights as stockholders
are terminated, not merely suspended. (Sec. 81, RCC)
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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
1. The AOI and bylaws of the corporation and all their amendments
2. The current ownership structure and voting rights of the corporation,
including lists of stockholders or members, group structures, intra-group
relations, ownership data, and beneficial ownership
3. The names and addresses of all the members of the board of directors or
trustees and the executive officers
4. A record of all business transactions
5. A record of the resolutions of the board of directors or trustees and of the
stockholders or members
6. Copies of the latest reportorial requirements submitted to the
Commission
7. The minutes of all meetings of stockholders or members, or of the board
of directors or trustees
8. Corporate records
9. Stock and transfer book, in case of stock corporations
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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
Requirements for the Exercise of the Right of Inspection
(1) The right must be exercised during reasonable hours on business days
(2) The person demanding the right has not improperly used any information
obtained through any previous examination of the books and records of
the corporation
(3) The demand is made in writing and in good faith, or for legitimate purpose
germane to his interest as stockholder
(4) It should follow the formalities that may be required in the by-laws
(5) The right does not extend to trade secrets
(6) The inspecting or reproducing party shall remain bound by confidentiality
rules under prevailing laws
(7) It is subject to limitations under special laws (e.g. Secrecy of Bank
Deposits and Foreign Currency Deposits Act)
(a) In case of delegation to the Executive Committee duly authorized in the by-
laws
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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
(b) Authorization pursuant to a contracted manager which may be an
individual, a partnership, or another corporation
(c) In case of close corporations, the stockholders may manage the business
of the corporation instead of a board of directors if the AOI so provide (Sec.
96, RCC)
Rationale for the Doctrine: The concentration in the board of the powers of
control of corporate business and of appointment of corporate officers and
managers is necessary for efficiency in large organization. Stockholders are
too numerous, scattered, and unfamiliar with the business of a corporation to
conduct its business directly.
EXPNS:
(1) Resolutions and transactions entered into by the Board within the powers
of the corporation cannot be reversed by the courts not even on the behest
of the stockholders
(2) Directors and officers acting within such business judgment cannot be
held personally liable for such acts
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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
(3) If the cause of the losses is merely error in business judgment, not
amounting to bad faith or negligence, directors and/or officers are not
liable
(4) The BOD has the power to create positions not provided for in the
corporation’s by-laws since the board is the corporation’s governing body
(5) Directors and officers who purport to act for the corporation, within the
lawful scope of their authority and in good faith, do not become liable,
whether civilly or otherwise, for the consequences of their acts
(6) The power to elect corporate officers was a discretionary power that the
law exclusively vested in the BOD and could not be delegated to
subordinate officers or agents
Term of Office – Directors shall be elected for a term of one (1) year from among
the holders of stocks registered in the corporation’s books, while trustees shall
be elected for a term not exceeding three (3) years from among the member of
the corporation (Sec. 22, RCC)
Term – time during which the officer may claim to hold the office as a matter of
right, and fixes the interval after which the several incumbents shall succeed
one another
Tenure – represents the term during which the incumbent actually holds office.
The tenure may be shorter (or in case of holdover, longer) than the term for
reasons within or beyond the power of the incumbent.
Hold-over period – the time from the lapse of the one year from a member’s
election to the Board and until his successor’s election and qualification
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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
COMMON QUALIFICATIONS OF DIRECTORS AND TRUSTEES
Disqualifications:
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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
Are directors or trustees required to be residents of the Philippines?
- Similar to the OCC, the RCC does not require Filipino citizenship for
directors or trustees of a corporation. However, if the corporation is
engaged in wholly nationalized activities, citizenship becomes a
qualification. Foreigners cannot be appointed to the board of
corporations engaged in wholly nationalized activities. For partly
nationalized activities, foreigners can be elected to the BOD in
proportion their foreign equity, as allowed by law. (Divina, 2020)
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