CORPORATION LAW REVIEWER (CODAL PROVISIONS) 1 SHANTLE TACIANA P.

FABICO TITLE I GENERAL PROVISIONS Definitions and Classifications Section 1. Title of the Code The Corporation Code of the Philippines Sec. 2. Corporation defined A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence. Artificial being Created by operation of law Right of succession and the powers, attributes and properties Authorized by law or incident to its existence Sec. 3. Classes of corporations 1. Stock 2. Non-Stock 3. De Facto 4. Corporation by estoppels 5. Close 6. Educational 7. Religious; Sole and Aggregate 8. Special Charter 9. Foreign 10. GOCC 11. Homeowners Association 1. Stock (S.3) With capital stock divided into shares and are authorized to distribute to the holders of such shares dividends or allotments of the surplus profits on the basis of the shares held With capital stock divided into shares MMSU COLLEGE OF LAW 09-9027 Authorized to distribute dividends (surplus profits) to the holders of such shares On the basis of the shares

1. Non-stock (S.87) No part of its income is distributable as dividends to its members, trustees, or officers. Any profit which it may obtain as an incident to its operations shall be used for the furtherance of its purpose for which the corporation was organized. No part of its income is distributable as dividends Any profit shall be used for the furtherance of its purpose 2. De facto (S.20) Any corporation claiming in good faith to be a corporation under this Code Elements: i. Valid Law under which it is incorporated; ii. Attempt in good faith to incorporate; and iii. Assumption of corporate powers Inquiry as to its exercise of corporate powers: Made by the Solicitor General in a quo warranto proceeding. Not collateral inquiry in any private suit 3. Corporation by Estoppel (S.21) A. With Fraud

CORPORATION LAW REVIEWER (CODAL PROVISIONS) 2 SHANTLE TACIANA P. FABICO Actor is liable as a general partner for debts, damages and liabilities incurred. Corporation cannot set up as defense that corp actually does not exist. Veil will be pierced to make corporators liable. If corporation sues the other party, it cannot resist obligation by saying that no corp exist. B. Without Fraud Actors are liable as limited partner. Corporation by estoppel applies to save the contract but juridical entity is then broken down to make actors liable. Both in bad faith: Corporation by estoppel does not apply. (Pari Delicto Doctrine, or the contract is recissible) 4. Close (S.96) One whose articles of incorporation provide that: i. All the corporation's issued stock of all classes, exclusive of treasury shares, shall be held of record by not more than a specified number of persons, not exceeding 20; ii. All the issued stock of all classes shall be subject to one or more specified restrictions on transfer; and iii. The corporation shall not list in any stock exchange or make any public offering of any of its stock of any class. A corporation shall not be deemed a close corporation when at least 2/3 of its voting stock or voting rights is owned or controlled by another corporation which is not a close corporation. GR: Any corporation may be incorporated as a close corporation EX: 1) Mining or oil companies; 2) Stock exchanges; 3) Banks; 4) Insurance companies; 5) Public utilities; 6) Educational institutions; and 7) Corporations declared to be vested with public interest. 5. Educational (S.106-107) governed by special laws and by the general provisions of this Code. favorable recommendation of the Ministry of Education and Culture is a pre-requisite to incorporation 6. Religious/Sole/Aggregate (S.109-116) A. Corporations sole Consists of one person only and his successor in some particular station, who are incorporated by law in order to give them some legal capacities and advantages, particularly that of perpetuity, which in their natural persons they could not have had May purchase and hold real estate and personal property for its church, charitable, benevolent or educational purposes May receive bequests or gifts for such purposes. 09-9027

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CORPORATION LAW REVIEWER (CODAL PROVISIONS) 3 SHANTLE TACIANA P. FABICO May sell or mortgage real property held by it by: i. obtaining an order for that purpose from the RTC of the province where the property is situated upon proof made to the satisfaction of the court that: (1) notice of the application for leave to sell or mortgage has been given by publication or otherwise in such manner and for such time as said court may have directed, and (2) that it is to the interest of the corporation that leave to sell or mortgage should be granted. ii. The application for leave to sell or mortgage must be: (1) made by petition, (2) duly verified, by the chief archbishop, bishop, priest, minister, rabbi or presiding elder acting as corporation sole, and (3) may be opposed by any member of the religious denomination, sect or church represented by the corporation sole B. Religious societies. Under common law, a religious society is a body of persons associated together for the purpose of maintaining religious worship. 7. Special charter (S.4) Corporations created by special laws or charters How Governed: i. special law or charter creating them or applicable to them; supplemented by the provisions of CCP (if applicable)

ii.

8. Foreign (S.123) a foreign corporation is one formed, organized or existing under any laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or state. It shall have the right to transact business in the Philippines after it shall have obtained a license to transact business in this country in accordance with this Code and a certificate of authority from the appropriate government agency. 9. GOCC normally created by special law referred to often as a charter Sec. 5. Corporators and incorporators, stockholders and members. 1. Corporators those who compose a corporation, whether as stockholders or as members. 2. Incorporators those stockholders or members mentioned in the articles of incorporation as originally forming and composing the corporation and who are signatories thereof. 3. Stockholders or shareholders Corporators in a stock corporation 09-9027

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CORPORATION LAW REVIEWER (CODAL PROVISIONS) 4 SHANTLE TACIANA P. FABICO May have preference in the distribution of the assets in case of liquidation.

4. Members Corporators in a non-stock corporation Sec. 6. Classification of shares. 1. Common (Sec. 6) 2. Preferred (Sec. 6) 3. Par Value and No par value shares (Sec. 6) 4. Founders shares (Sec. 7) 5. Redeemable (Sec. 8) 6. Treasury (Sec. 9) 7. Convertible 8. Participating 1. Common (Sec. 6) One which entitles the holder thereof to a pro rata division of the profits, if there are any, and in its assets upon dissolution, without any preference or advantage in that respect over other stockholder or class of stockholders except preferred stockholders 2. Preferred (Sec. 6) One with a stated par value which entitles the holder to certain preferences over the holders of common stock Preferences given to preferred shares should not violate the law. Cannot be preferred over the creditor Cannot issue preferred shares with no par value shares. May be given preference in the distribution of dividends. If profits are not enough to give everybody dividends, the holders of preferred shares get a first crack before the holders of the common shares get anything.

3. Par Value (S.6) With a specific money value fixed in the articles of incorporation and appearing in the certificate stock. The board of directors, where authorized in the articles of incorporation, may fix the terms and conditions of preferred shares of stock or any series thereof. Such terms and conditions shall be effective upon the filing of a certificate thereof with the Securities and Exchange Commission. 4. No par value shares (Sec. 6) Without any stated value appearing on the face of the certificate of stock. In other words, it is a stock which does not state how much money it represents. Banks, trust companies, insurance companies, public utilities, and building and loan associations shall not be permitted to issue no-par value shares of stock. issued without par value shall be deemed fully paid and nonassessable and the holder of such shares shall not be liable to the corporation or to its creditors in respect thereto may not be issued for a consideration less than the value of PHP5.00 per share 09-9027

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CORPORATION LAW REVIEWER (CODAL PROVISIONS) 5 SHANTLE TACIANA P. FABICO Payment received by corp for this kind of stock shall be treated as capital and shall not be available for distribution as dividends. 5. Founders shares (Sec. 7) Shares issued to the organizers and promoters of a corporation in consideration of some supposed right or property. Such shares usually share in the profits only after a certain percentage has been paid upon the common stock Often given special privileges over other stocks as to voting and as to division of profits in excess of a minimum dividend on the common stock. where the exclusive right to vote and be voted for in the election of directors is granted, such right to vote shall be for a limited period not exceeding 5 years subject to the SEC approval 6. Non-voting shares (S.6) entitled to vote on the following matters: i. Amendment of the articles of incorporation; ii. Adoption and amendment of by-laws; iii. Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of the corporate property; iv. Incurring, creating or increasing bonded indebtedness; v. Increase or decrease of capital stock; vi. Merger or consolidation of the corporation with another corporation or other corporations; Investment of corporate funds in another corporation or business in accordance with this Code; and Dissolution of the corporation.

vii.

viii.

That there shall always be a class or series of shares which have complete voting rights. Any or all of the shares may or may not have a par value as may be provided for in the articles of incorporation no share may be deprived of voting rights except those classified and issued as "preferred" or "redeemable" shares A corporation may, furthermore, classify its shares for the purpose of insuring compliance with constitutional or legal requirements. GR: each share shall be equal in all respects to every other share EX: otherwise provided in the articles of incorporation and stated in the certificate of stock vote necessary to approve a particular corporate act as provided in this Code shall be deemed to refer only to stocks with voting rights. 7. Redeemable (Sec. 8) May be issued by the corporation when expressly so provided in the articles of incorporation. May be purchased or taken up by the corporation upon: 09-9027

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CORPORATION LAW REVIEWER (CODAL PROVISIONS) 6 SHANTLE TACIANA P. FABICO i. expiration of a fixed period, regardless of the existence of unrestricted retained earnings in the books of the corporation; and other terms and conditions as may be stated in the articles of incorporation (T&C must be stated in the certificate of stock representing said shares) Sec. 10. Number and qualifications of incorporators. 1. 5 - 15 2. all of legal age 3. majority are residents of the Philippines 4. for any lawful purpose Each of the incorporators of a stock corporation must own or be a subscriber to at least 1 share of the capital stock of the corporation. Sec. 11. Corporate term. GR: Max of 50Y from the date of incorporation EX: 1. sooner dissolved 2. unless said period is extended a) not exceeding 50Y in a single instance b) amendment of the articles of incorporation c) no extension can be made earlier than 5Y prior to the original or subsequent expiry date(s) unless there are justifiable reasons for an earlier extension as may be determined by the SEC. Kinds of Capital: 1. 2. 3. 4. 5. 6. Authorized (Sec. 12) Subscribed (Sec. 13) Paid-up (Sec. 13) Paid-in surplus Outstanding Issued

ii.

8. Treasury (Sec. 9) shares which have been issued and fully paid for, but subsequently reacquired by the issuing corporation by purchase, redemption, donation or through some other lawful means. may again be disposed of for a reasonable price fixed by the board of directors. 9. Convertible Share which is convertible or changeable by the stockholder form one class to another class (such as from preferred to common) at a certain price and within a certain period. 10. Participating Imposes upon the rights of the common shares to the residual corporate assetshence, participating shares not usually issued.

TITLE II INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATIONS

1. Authorized (Sec. 12) Amount fixed in the articles of incorporation to be subscribed and paid by the stockholders The portion of the paid-in capital arising from subscriptions becomes the legal capital of the corporation 09-9027

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CORPORATION LAW REVIEWER (CODAL PROVISIONS) 7 SHANTLE TACIANA P. FABICO which cannot be returned to the stockholders in any form during the lifetime of the corporation unless otherwise allowed by law Composed of two items: i. paid-up capital; and ii. subscriptions receivables represents the legal and proportional standing of the stockholders with respect to the corporation and corporate matters, such as their rights to vote and to receive dividends 2. Subscribed (Sec. 13) portion of the capital stock subscribed 3. Paid-up (Sec. 13) Total paid subscription 4. Paid-in surplus Paid in excess of par value 5. Outstanding total shares of stock issued to subscribers or stockholders, whether or not fully or partially, except treasury shares a. Payable on a date or dates fixed in the contract of subscription without need of call; or b. in the absence of a fixed date or dates, upon call for payment by the board of directors In no case shall the paid-up capital be less than five Thousand (P5,000.00) pesos. Sec. 14. Contents of the articles of incorporation. Who: All corporations organized under the CCP shall file with the SEC What: articles of incorporation Language: Any of the official languages

How: duly signed and acknowledged by all of the incorporators, 1. Name of the corporation; 2. Specific purpose or purposes for which the corporation is being incorporated. More than one stated purpose: state which is the primary purpose and which is/are the secondary purpose or purposes a non-stock corporation may not include a purpose which would change or contradict its nature as such; 3. Location of the principal office, must be within the Philippines; 4. Term for which the corporation is to exist; 5. Names, nationalities and residences of the incorporators; 6. Number of directors or trustees, 5 - 15; 7. Names, nationalities and residences of persons who shall act as directors or trustees until the first regular directors or trustees are duly elected and qualified in accordance with this Code; 8. If stock corporation: 09-9027

6. Issued Synonymous with outstanding Sec. 13. Amount of capital stock to be subscribed and paid for the purposes of incorporation. 1. At least 25% of the authorized capital stock as stated in the articles of incorporation must be subscribed at the time of incorporation; and 2. At least 25% of the total subscription must be paid upon subscription 3. Balance:

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CORPORATION LAW REVIEWER (CODAL PROVISIONS) 8 SHANTLE TACIANA P. FABICO a. amount of its authorized capital stock in lawful money of the Philippines, b. number of shares into which it is divided c. in case the share are par value shares, the par value of each, d. names, nationalities and residences of the original subscribers, and e. amount subscribed and paid by each on his subscription f. if some or all of the shares are without par value, such fact must be stated 9. If non-stock corporation a. amount of its capital, b. the names, nationalities and residences of the contributors and c. the amount contributed by each 10. Other matters which are not inconsistent with law and which the incorporators may deem necessary and convenient. SEC will ONLY accept the articles of incorporation of any stock corporation if: 1. accompanied by a sworn statement of the Treasurer elected by the subscribers showing that at least 25% of the authorized capital stock of the corporation has been subscribed, and 2. at 25% of the total subscription has been fully paid to him in actual cash and/or in property 3. fair valuation of which is equal to at least 25% of the said subscription 4. paid-up capital being not less than P5,000.00 Sec. 16. Amendment of Articles of Incorporation. Stock Corporation: 1. Majority vote of the BOD; 2. vote or written assent of the stockholders representing at least 2/3 of the outstanding capital stock 3. without prejudice to the appraisal right of dissenting stockholders Non-Stock Corporation: 1. Majority vote of the trustees 2. Vote or written assent of at least 2/3 of the members Common Procedures: 1. Original and amended articles shall contain all provisions required by law to be set out in the articles of incorporation. 2. Articles as amended shall be indicated by underscoring the change or changes made 3. a copy thereof duly certified under oath by the corporate secretary and a majority of the directors or trustees stating the approval of the required vote of the stockholders or members 4. Submitted to the SEC When the amendments take effect: 1. Upon approval by the SEC; or 2. From the date of filing with the SEC if not acted upon within 6M from the date of filing for a cause not attributable to the corporation. Sec. 17. Grounds when articles of incorporation or amendment may be rejected or disapproved. SEC may reject the articles of incorporation or disapprove any amendment thereto if it is not in compliance with the requirements CCP SEC shall give the incorporators a reasonable time to correct or modify the objectionable portions of the articles or amendment. Grounds for rejection or disapproval: MMSU COLLEGE OF LAW 09-9027

CORPORATION LAW REVIEWER (CODAL PROVISIONS) 9 SHANTLE TACIANA P. FABICO 1. AI or any amendment thereto is not substantially in accordance with the prescribed form 2. Purpose of the corporation are patently unconstitutional, illegal, immoral, or contrary to government rules and regulations; 3. The Treasurer's Affidavit concerning the amount of capital stock subscribed and/or paid if false; 4. The percentage of ownership of the capital stock to be owned by Filipino Citizens has not been complied with as required by existing laws or the Constitution. The following must be accompanied by a favorable recommendation of the appropriate government agency: 1. Banks 2. banking and quasi-banking institutions 3. building and loan associations 4. trust companies 5. other financial intermediaries 6. insurance companies 7. public utilities 8. educational institutions, and 9. other corporations governed by special laws Sec. 18. Corporate name. Not Allowed: 1. identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law 2. patently deceptive, confusing or contrary to existing laws. SEC shall issue an amended certificate of incorporation under the amended name once approved. Sec. 19. Commencement of corporate existence & juridical personality from the date the SEC issues a certificate of incorporation under its official seal thereupon the incorporators, stockholders/members and their successors shall constitute a body politic and corporate under the name stated in the articles of incorporation for the period of time mentioned therein, unless period is extended or the corporation is sooner dissolved in accordance with law. Sec. 22. Effects on non-use of corporate charter and continuous inoperation of a corporation. When corporate powers cease and the corporation be deemed dissolved: If corporation does not formally organize and commence the transaction of its business or the construction of its works within 2Y from the date of its incorporation Suspension or revocation of its corporate franchise or certificate of incorporation if: Corporation has commenced the transaction of its business but subsequently becomes continuously inoperative for a period of at least 5Y This provision shall not apply if defect is due to causes beyond the control of the corporation as may be determined by the SEC.

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CORPORATION LAW REVIEWER (CODAL PROVISIONS) 10 SHANTLE TACIANA P. FABICO TITLE III BOARD OF DIRECTORS/TRUSTEES/OFFICERS Sec. 23. The board of directors or trustees. BOD is the body which: Exercises all powers provided for under the Corporation Code; Conducts all business of the corporation; and Controls and holds all property of the corporation. Members have been characterized as trustees or directors clothed with a fiduciary character. It is clearly separate and distinct from the corporate entity itself 1. Elected from among the stockholders or where there is no stock, from among the members of the corporation 2. hold office for 1Y until their successors are elected and qualified. 3. Every director must own at least 1 share of the capital stock of the corporation of which he is a director, 4. share shall stand in his name on the books of the corporation. 5. If he ceases to be the owner of at least 1 share of the capital stock of the corporation of which he is a director shall cease to be a director. 6. Trustees of non-stock corporations must be members thereof. 7. Majority of the directors or trustees of all corporations organized under CCP must be residents of the Philippines. Sec. 24. Election of directors or trustees. 1. Present a) in person; or b) by representative authorized to act by written proxy i. owners of a majority of the outstanding capital stock; if there be no capital stock: majority of the members entitled to vote. 2. By ballot if requested by any voting stockholder or member. ii.

How elected: Stockholders have the option to adopt any of the following: 1. Straight voting every stockholder may vote such number of shares for as many persons as there are directors to be elected; 2. Cumulative Voting for One Candidate a stockholder is allowed to concentrate his votes and give one candidate as many votes as the number of directors to be elected multiplied by the number of his shares shall equal; 3. Cumulative Voting by Distribution a stockholder may cumulate his shares by multiplying also the number of directors to be elected and distribute the same among as many candidates as he shall see fit. Cumulative voting is not available in non-stock corporations. (JRS) no delinquent stock shall be voted. Any meeting of the stockholders or members called for an election may adjourn from day to day or from time to time but not sine die or indefinitely if, for any reason, no election is held, or if there not present or represented by proxy, at the meeting, the owners of a majority of the outstanding capital stock, or if there be no capital stock, 09-9027

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CORPORATION LAW REVIEWER (CODAL PROVISIONS) 11 SHANTLE TACIANA P. FABICO a majority of the member entitled to vote. Non-Stock Corporations: GR: members may cast as many votes as there are trustees to be elected; only 1 vote per candidate. EX: Unless otherwise provided in the articles of incorporation or in the by-laws EX: Election of officers which shall require the vote of a majority of all the members of the board. Directors or trustees cannot attend or vote by proxy at board meetings.

Sec. 25. Quorum of corporate officers. The Corporate Officers are: The President (who shall be a director) Treasurer (who may not be a director) Corporate Secretary (who shall be a resident and citizen of the Philippines) And such other officers as may be provided in the by-laws. GR: Any 2 or more positions may be held concurrently by the same person. EX: No one shall act as President and Secretary or as President and Treasurer, at the same time. The directors or trustees and officers to be elected shall perform the duties enjoined on them by law and the bylaws of the corporation. Quorum: For the transaction of corporate business: GR: majority of the number of directors or trustees ixed in the articles of incorporation EX: The articles of incorporation or the by-laws provide for a greater majority Decision for a corporate act: GR: At least a majority of the directors or trustees present at a meeting

Sec. 26. Report of election of directors, trustees and officers. Within 30D after the election of the directors, trustees and officers of the corporation; The secretary, or any other officer of the corporation, shall submit to the SEC the (1)names, (2)nationalities and (3)residences of the directors, trustees, and officers elected. Should a director, trustee or officer die his heirs shall immediately report such fact to the SEC.

Should a director, trustee or officer resign or in any manner cease to hold office the secretary, or any other officer of the corporation, or the director, trustee or officer himself, shall immediately report such fact to the SEC. Sec. 27. Disqualification of directors, trustees or officers. 1. No person convicted by final judgment of an offense punishable by imprisonment of exceeding 6Y; or 2. Violation of this Code committed within five (5) years prior to the date of his election or appointment Sec. 28. Removal of directors or trustees. Requisites for Removal:

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CORPORATION LAW REVIEWER (CODAL PROVISIONS) 12 SHANTLE TACIANA P. FABICO 1. It must be take place either at a regular meeting or special meeting of the stockholders or members called for the purpose; 2. There must be previous notice to the stockholders or members of the intention to remove; 3. The removal must be by a vote of the stockholders representing 2/3 of Outstanding Capital Stock or 2/3 members. 4. The director may be removed with or without cause unless he was elected by the minority, in which case, it is required that there is cause for removal. GR: 2/3 vote is already enough to remove a director. EX: When the director is elected by the minority through cumulative voting, he may not be removed without Cause even if there is 2/3 votes There is no legal definition for cause but the Code enumerates three duties of a director/trusteeloyalty, obedience, diligenceviolation thus of either three will constitute cause for removal Only stockholders or members have the power to remove the directors and trustees elected by them as laid down in Section28 of the Code Sec. 29. Vacancies in the office of director or trustee. filled by the vote of at least a majority of the remaining directors or trustees, if still constituting a quorum: Any vacancy occurring in the board of directors or trustees Not by removal by the stockholders or members Not by expiration of term If no quorum: vacancies must be filled by the stockholders in a regular or special meeting called for that purpose. A director or trustee so elected to fill a vacancy shall be elected only or the unexpired term of his predecessor in office. By reason of an increase in the number of directors or trustees: Filled only by an election at a regular or at a special meeting of stockholders or members duly called for the purpose; or In the same meeting authorizing the increase of directors or trustees if so stated in the notice of the meeting. Sec. 30. Compensation of directors. 1. Provision in the by-laws fixing their compensation 2. If no provision in the by-laws: GR: directors shall not receive any compensation as directors EX: Reasonable per diems 3. Compensation other than per diems may be granted to directors by: vote of the stockholders representing at least a majority of the outstanding capital stock at a regular or special stockholders' meeting. In no case shall the total yearly compensation of directors, as such directors, exceed 10% of the net income before income tax of the corporation during the preceding year.

Sec. 31. Liability of directors, trustees or officers. Solidarily liable: 09-9027

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CORPORATION LAW REVIEWER (CODAL PROVISIONS) 13 SHANTLE TACIANA P. FABICO 1. He assents to a patently unlawful act of the corporation, or for bad faith or gross negligence in directing its affairs, or for conflict of interest, resulting in damages to the corporation, its stockholders or other persons 2. He consents to the issuance of watered stocks, or who having knowledge thereof, doesn't forthwith file with the corporate secretary his written objection thereto 3. He agrees to hold himself personally and solidarily liable with the corporation 4. He is made by a specific provision of law, to personally answer for his corporate action 5. An officer may also be solidarily liable with the corporation for simulated or fraudulent contracts entered into in behalf of the corporation When be liable as a trustee for the corporation and must account for the profits which otherwise would have accrued to the corporation: (1)attempts to acquire or (1)acquires, in violation of his duty, any interest adverse to the corporation in respect of any matter which has been reposed in him in confidence, as to which equity imposes a disability upon him to deal in his own behalf 2. the vote of such director or trustee was not necessary for the approval of the contract; 3. 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. #1 OR #2 is absent: contract may be ratified by the vote of the stockholders representing at least 2/3 of the outstanding capital stock or of at least 2/3 of the members in a meeting called for the purpose Full disclosure of the adverse interest of the directors or trustees involved MUST be made at such meeting Sec. 33. Contracts between corporations with interlocking directors. GR: contract between corporations having interlocking directors shall not be invalidated on that ground alone EX: Except in cases of fraud, and provided the contract is fair and reasonable under the circumstances If the interest of the interlocking director in one corporation is substantial and his interest in the other corporation or corporations is merely nominal, he shall be subject to the provisions of the preceding section insofar as the latter corporation or corporations are concerned. Stockholdings exceeding 20% of the outstanding capital stock shall be considered substantial for purposes of interlocking directors. Sec. 34. Disloyalty of a director.

Sec. 32. Dealings of directors, trustees or officers with the corporation. A contract between the corporation and any of its directors or trustees or officers is voidable, at the option of such corporation, unless all the following conditions are present: 1. 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;

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CORPORATION LAW REVIEWER (CODAL PROVISIONS) 14 SHANTLE TACIANA P. FABICO Director by virtue of his office acquires for himself a business opportunity which should belong to the corporation Obtaining profits to the prejudice of such corporation he must account to the latter for all such profits by refunding the same Unless: his act has been ratified by a vote of the stockholders owning or representing at least 2/3 of the outstanding capital stock. This provision shall be applicable, notwithstanding the fact that the director risked his own funds in the venture. Sec. 35. Executive committee. by-laws may create an executive committee: 1. composed of not less than three members of the board 2. to be appointed by the board 3. May act by majority vote of all its members specific matters within the competence of the board delegated to it in the by-laws or on a majority vote of the board Except: i. approval of any action for which shareholders' approval is also required; ii. filing of vacancies in the board; iii. amendment or repeal of by-laws or the adoption of new bylaws; iv. amendment or repeal of any resolution of the board which by its express terms is MMSU COLLEGE OF LAW 09-9027 not so amendable or repealable; and a distribution of cash dividends to the shareholders.

v.