DEFINITION OF TERMS
Consolidation refers also to the joining of two or more corporations, but
Ultra vires acts are such acts that are beyond the authority of a
corporation to perform.
Independent director is a person who, apart from shareholdings and
fees received from the corporation, is independent of management and
free from any business or other relationship which could, or could
reasonably be perceived to materially interfere with the exercise of
independent judgment in carrying out the responsibilities as a director.
Motu proprio or at its own initiative
Preemptive right is the right of each shareholder to subscribe to all issued
shares of the corporation, in proportion to their respective shareholdings,
unless such right is waived in the article of incorporation.
NOTE: such right is automatically waived when such issuance of shares is
for the purpose of:
(a) compliance with laws requiring stock offerings or minimum stock
ownership by the public
(b) exchange for property needed for corporate purposes or in
payment of a previously contracted debt which requires approval
of stockholders representing at least 2/3 of outstanding capital
stock
Watered stocks are those stocks issued at a price higher than its issued
value.
Merger is the joining of two or more corporations wherein one
corporation remains and is considered the surviving corporation which
completely absorbed the latter.
unlike in merger, the consolidated corporations are formed into a one
completely new corporation.
One Person Corporation. – A One Person Corporation is a corporation
with a single stockholder: Provided, That only a natural person, trust, or an
estate may form a One Person Corporation.
Nominee and Alternate Nominee. – The single stockholder shall
designate a nominee and an alternate nominee who shall, in the event of
the single stockholder’s death or incapacity, take the place of the single
stockholder as director and shall manage the corporation’s affairs.
Methods of Dissolution. – A corporation formed or organized under the
provisions of this Code may be dissolved voluntarily or involuntarily.
Corporate Liquidation whose corporate existence is terminated in any
other manner, shall nevertheless remain as a body corporate for three (3)
years after the effective date of dissolution, for the purpose of prosecuting
and defending suits by or against it and enabling it to settle and close its
affairs, dispose of and convey its property, and distribute its assets, but not
for the purpose of continuing the business for which it was established.
PENALTIES:
Cease and Desist Orders – Whenever the Commission has reasonable
basis to believe that a person has violated, or is about to violate this Code,
a rule, regulation, or order of the Commission, it may direct such person to thousand pesos (P10,000.00) to Two hundred thousand pesos
desist from committing the act constituting the violation. (P200,000.00).

Contempt. – Any person who, without justifiable cause, fails or refuses to

comply with any lawful order, decision, or subpoena issued by the
Commission shall, after due notice and hearing, be held in contempt and
fined in an amount not exceeding Thirty thousand pesos (P30,000.00).
When the refusal amounts to clear and open defiance of the Commission’s
order, decision, or subpoena, the Commission may impose a daily fine of
One thousand pesos (P1,000.00) until the order, decision, or subpoena is
complied with.

Administrative Sanctions. – If, after due notice and hearing, the

Commission finds that any provision of this Code, rules or regulations, or
any of the Commission’s orders has been violated, the Commission may
impose any or all of the following sanctions, taking into consideration the
extent of participation, nature, effects, frequency and seriousness of the
violation:
(a) Imposition of a fine ranging from Five thousand pesos (P5,000.00) to
Two million pesos (P2,000,000.00), and not more than One thousand
pesos (P1,000.00) for each day of continuing violation but in no case to
exceed Two million pesos
(P2,000,000.00);
(b) Issuance of a permanent cease and desist order;
(C) Suspension or revocation of the certificate of incorporation; and
(d) Dissolution of the corporation and forfeiture of its assets under the
conditions in Title XIV of this Code.

Unauthorized Use of Corporate Name; Penalties. – The unauthorized

use of a corporate name shall be punished with a fine ranging from Ten