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4.
Right of
Succession
No right of
succession.
Extent of
Liability to Third
Persons
Partners may be
personally and
subsidiarily
(sometimes
solidarily) liable for
partnership debts.
Transferability
of Interest
Delectus
personarum
Term of
Existence
May be
established for any
period of time.
Firm Name
Limited
partnership bears
Ltd.
Dissolution
At any time
Laws which
Govern
Civil Code
should be in the
name of the
corporation.
A corporation has
such right.
Stockholders are
liable only to the
extent of their
investment as
represented by
the shares
subscribed by
them.
A stockholder has
the right to
transfer his shares
without prior
consent of the
others.
50 years,
extendible for
another 50 years.
May adopt any
name provided it
is not identical or
deceptively
similar to any
registered firm
name or contrary
to law.
Can only be
dissolved with the
consent of the
State.
Corporation Code
DISADVANTAGES
of
a
BUSINESS CORPORATION
1. Relatively complicated
formation and management;
2. High cost of formation and
operations;
3.
Credit is strengthened;
4.
Centralized
management;
Standardized creation,
organization,
management
and
dissolution;
Makes
feasible
gigantic
financial
undertakings;
5.
6.
7.
Shareholders
limited liability
8.
9.
have
degree
of
control and
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2.
3.
a.
real
or
CAPITAL STOCK
An amount; abstract.
Amount fixed in the articles
of corporation, unaffected by
profits and losses.
When issued, belongs to the
stockholders.
Always personal.
d)
DISADVANTAGES OF PAR
VALUE SHARES
Subscribers are liable to
corporate creditors for their
unpaid subscription;
Stated face value of the share
is not an accurate criterion of
its true value.
Unlikelihood of sale of
subsequently issued shares
at a lower price;
Unlikelihood of distribution of
dividends that are only
ostensible profits.
ADVANTAGES OF NO PAR
VALUE SHARES
Issued as fully paid and nonassessable;
Flexible price;
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DISADVANTAGES OF NO
PAR VALUE SHARES
Legalize large issues of stock
property;
Conceal the money or
property represented by the
shares;
Promote issuance of watered
stock;
Lesser protection to creditors.
SECONDARY
(SPECIAL)
FRANCHISE
Franchise to exercise powers
and privileges granted to
such corporation to the
business for which it was
created,
including
those
conferred for purposes of
public benefit such as the
power of eminent domain
and
other
powers
and
privileges enjoyed by public
utilities.
Conferred
upon
the
corporation
after
its
incorporation and not upon
the individuals who compose
the corporation.
the Philippines.
Powers
1)
2)
3)
of the Board:
Exercise all corporate powers (Sections 36-44)
Conduct the business of the corporation
Hold and control all properties of the corporation
Vacancy
results
from
the
removal
by
the
vote.
stockholders/members
or
the
expiration
of
term;
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Sec.
33.
Contracts
between
corporations
with
interlocking directors. - Except in cases of fraud, and
provided the contract is fair and reasonable under the
circumstances, a contract between two or more corporations
having interlocking directors shall not be invalidated on that
ground alone: Provided, That if the interest of the interlocking
Section 31. Liability of directors, trustees, or officers.
director in one corporation is substantial and his interest in the
Cases when directors/trustees/officers are liable for other corporation or corporations is merely nominal, he shall be
damages:
subject to the provisions of the preceding section insofar as the
1. Wilfully and knowingly votes or assents to patently latter corporation or corporations are concerned.
unlawful acts of the corporation;
Stockholdings exceeding twenty (20%) percent of the
2. Guilty of gross negligence or bad faith in directing outstanding capital stock shall be considered substantial for
affairs of the corporation;
purposes of interlocking directors.
3. Acquires any personal or pecuniary interest in conflict
with his duty as such director or trustee.
Contracts
between
corporation
with
interlocking
4. Consents to the issuance of watered stocks or who, directors.
having knowledge thereof, does not forthwith file with- Contract is valid between two or more corporations which have
the corporate secretary his written objection thereto;
interlocking directors (sec. 44). However, if the interest of the
5. When he is made, by a specific provision of law, to
interlocking director in one corporation is substantial, the
personally answer for his corporate action;
rules of sec. 32 on self-dealing directors shall apply insofar as
6. When he agrees to hold himself personally and
the latter corporation is concerned.
solidarily liable with the corporation.
- This section pertains to transaction between corporations with
Three-fold duty of directors: OBEDIENCE, LOYALTY, DILIGENCE
Sec. 32. Dealings of directors, trustees or officers with
the corporation. - A contract of the corporation with one or
more of its directors or trustees or officers is voidable, at the
option of such corporation, unless all the following conditions
are present:
1. That the presence of such director or
trustee in the board meeting in which the
contract was approved was not necessary to
constitute a quorum for such meeting; 2. That
the vote of such director or trustee was nor
necessary for the approval of the contract; 3.
That the contract is fair and reasonable under
the circumstances; and 4. That in case of an
officer, the contract has been previously
authorized by the board of directors.
Where any of the first two conditions set forth in the preceding
paragraph is absent, in the case of a contract with a director or
trustee, such contract may be ratified by the vote of the
stockholders representing at least two-thirds (2/3) of the
outstanding capital stock or of at least two-thirds (2/3) of the
members in a meeting called for the purpose: Provided, That
full disclosure of the adverse interest of the directors or
trustees involved is made at such meeting: Provided, however,
That the contract is fair and reasonable under the
circumstances.
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