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BUSINESS LAW 2 (T) – Tangible, dapat ma-assess muna ang appraisal, zonal or

March 3, 2018 Discussion market value


(IT) – Intangible, ang amount ng intangible property na
 Three fold duty of a director: ipangbibili ng shares ay dapat ma-determine ng incorporators or
1. Obedience ng independent appraiser.
2. Loyalty
3. Diligence - Capitalization = Retained Earnings being transferred to stated capital; pertains to
distribution of share dividends
 STOCKS AND STOCKHOLDERS - Conversion of stocks from Ordinary Share to Preference Sahre or vice versa
- Certificate of Stock = evidence of ownership of stocks; not a negotiable instrument
3 ways in which a person may become a stockholder - Payment of unpaid subscription:
1. By a contract of subscription with the corporation; 1. By board action (deliquency sale) or when the corporation does a “CALL”
2. By the purchase of TS from the corporation; and 2. By collection case in court – involves highest bidder
3. By purchase or acquisition of shares from existing stockholders.
 MERGER AND CONSOLIDATION
Subscription Contract - Pag sasama o pagbuo ng isa pang korporasyon
- Written or oral (kahit ORAL valid and enforceable pa rin)
- Conditional Subscription (no subscription until the performance or fulfillment of the Merger A Corp + B Corp = A Corp or B Corp
condition is made. This is similar to Conditional obligations in your ObliCon) Consolidation A Corp + B Corp = C Corp
- Subscription upon special terms
Effects:
Pre-incorporation Subscription 1. There will only be a single corporation. Using the illustration above, for merger, either si
- PRE subscription and POST subscription A or si B ang tatawagin na surviving corporation. While for consolidation, si C ay
- Kapag PRE, this is a subscription even when the corporation is still to be formed, which tatawagin na consolidated corporation.
means irrevocable, except: 2. Terminated na ang existence ng maiiwan na coroporation.
1. Lapse of a period of 6 months 3. The surviving or consolidated corporation will possess all the rights, privileges,
2. All the subscribers consent immunities and powers and shall be subject to all the duties and liabilities of a
3. Corporation fails to incorporate corporation organized under the Code.
Hindi na pwedeng mabago. 4. The surviving or consolidated corporation shall possess all the rights, privileges,
- The law tells us na kapag meron kang pre-incorporation subscription, IRREVOCABLE na immunities and franchises of the constituent corporations; and all property and all
raw yun except sa tatlong (3) instances na binaggit sa taas. Pero, there is an exception receivables due on whatever account, including subscriptions to shares and other
to the exception. Meaning, the pre-incorporation subscription will remain IRREVOCABLE choses in action, and all and every other interest of, or belonging to, or due to each
if and only if, nasubmit na sa SEC ang AOI. constituent corporation, shall be deemed transferred to and vested in such surviving ro
consolidated corporation without further act or deed.
Stocks 5. The surviving or consolidated corporation shall be responsible and liable for all the
- Shall not be issued in exchange of Promissory Notes or future services liabilities and obligations of eachof the constituent corporations.
- May be acquired through:
1. Cash - Merger and consolidation will only become valid upon issuance of certificate of merger.
2. Properties
 APPRAISAL RIGHT Within 10 days from demand of payment, dapat ma-submit na ng dissenting stockholder
ang kanyang stock certificate sa corporation for notation. Failure to do so will terminate his
Appraisal right right at the option of the corporation.
- the method of paying a shareholder for the taking of his property.
- Right granted to dissenting stockholders on certain corporate or business decisions to A stockholder whose subscription is not fully paid is still entitled to exercise his appraisal
demand payment of the FMV of their shares. right.
- Purpose: to protect the property right of the dissenting shareholder
 NON STOCK CORPORATIONS

Someone who holds opinion that is different from Non-stock Corporations


others. - No part of its income is distributed as dividends.
- Shareholders are called Members
Instances when a stockholder may have the right to dissent and demand payment ofthe fair - Board of Directors is being changed to Board of Trustees
market value of his shares: - Considered pa rin na non-stock corp ang isang corporation even if theire capital is
1. Any amendment to AOI with effects of: divided into shares as long as hindi sila nagdidistribute ng dividends sa kanilang
a. Changing or restricting the rights if an stockholder or class of shares; members and officers.
b. Authorizing preferences in any respect superior to those of outstanding shares of - It is still considered as non-stock corp kahit may income sila na na-earn as long as ang
any class; or income nila ay ginagamit according to their purpose stated in AOI.
c. Extending or shortening corporate term - Purpose of a non stock corporation can be any of the following but not exclusive to:
2. Sale, lease, exchange , transfer, mortgage, pledge or other disposition of all or 1. Charitable
substantially all corporate property; and 2. Religious
3. In case of merger or consolidation 3. Educational
4. Professional
There are 2 effects when the dissenting stockholder demands for the payment of his share: 5. Cultural
1. From the time of demand for payment – all rights are suspended except the right to 6. Fraternal
receive payment of share. 7. Literary
2. After either the right ceases or the purchase of the said shares by the corporation – all 8. Scientific
rights accruing to such shares are restored and all dividend distributions which would 9. Social
have accrued. 10. Civic Service

If the dissenting stockholder is not paid the value of his shares within 30 days after Membership and voting rights
theaward, his voting and dividend rights shall immediately be restored. - General rule: each member, regardless of class, shall be entitled to one vote (NO
CUMULATIVE VOTING)
General Rule: All the costs and expenses of appraisal shall be borne by the corporation. - Exception: The right to vote is limited, broadened or denied in the AOI or the by-laws
Exception: The fair value ascertained by the appraisers is approximately the same asthe - General rule:
price which the corporation offered to pay the dissenting stockholder. a. Membership in a non-stock corporation and all rights arising therefrom are personal
and non-transferrable.
General Rule: In an action to recover the fair value of stocks, all costs and expenses shall be b. The board of trustees shall have the authority to admit members.
assessed against the corporation. c. Termination of membership shall have the effect of extinguishing all rights of a
Exception: The refusal of the stockholder to receive payment is unjustified. member in the corporation or in its property
- Exception: The AOI or by-laws mayprovide otherwise. 6. Educational Institutions; and
7. Corporations declared to be vested with public interest
Trustees and Officers - Any action by the directors of a close corporation without meeting is invalid, except
- The number of trustees in a non-stock corporation may exceed 15. when:
- The term of office of the BOT may be staggered. They shall classify themselves in order 1. Written consent is signed by all the directors;
that 1/3 of their number shall expire every year and subsequent elections of trustees 2. All the stockholders have actual or implied knowledge of the action and make no
comprising 1/3 shall be held annually. prompt objection in writing;
- Qualifications of a trustee:
1. He is a member of the corporation Deadlock
2. Majority thereof must be residents of the Philippines - The directors or stockholders are so divided respecting the management of the
3. Other qualifications as may be provided for in the by-laws corporation’s business and affairs that the votes required for any corporate action
- Regular or special meetings of members of a non-stock corporation shall be held in the cannot be obtained.
city or municipality where the principal office is located, and if practicable in the - Matching vote or tie
principal office of the corporation. - In case of deadlock, the SEC has the power to arbitrate the dispute.
- Requirements for meeting held outside the location of principal office as provided for by
the by-laws:
1. Proper notice is sent to all members indicating the date, time and place of the
meeting; and
2. The place of meeting must be within the Philippines.
- All proceedings and business transactions at a meeting improperly held or called are
invalid except when all the members and present or duly represented at the meeting.

 CLOSE CORPORATIONS

Close Corporations
- One whose AOI provides that:
1. All the corporation’s issued stock of all classes, exclusive of TS, shall be held of
record by not more than a specified number of persons , not exceeding 20;
2. All the issued stock of all classes shall be subject to one or more specified
restrictions on transfer permitted by Title XV of the Code;
3. The corporation shall not list in any stock exchange or make any public offering of
any of its stock of any class.
- Absence of any of the 3 requisites mentioned above would not make a corporation
close. Thus, be governed by the general provisions of ordinary corporations.
- Any corporation may be incorporated as a close corporation, except:
1. Mining or oil companies;
2. Stock exchanges;
3. Banks;
4. Insurance companies;
5. Public utilities;