Ratified by at least2/3 of the OCSS E C I N T E R I M GUIDELIN ES

Corporation must have:

Minimum net wortho f P 2 5 M a t t h e time of the filing of the application Have been in operation for atl east 3 years

Must fulfill financialratio man dated byS E C i n i n t e r i m guidelines required:1)trust i ndenturewith a t rusteebank2)und erwritingagreeme nt

Bonds registered with the SECPower to sell, dispose,lease, en cumber (Sec.40)A LL

Quantitative TestS UBSTANTIALLY ALL

Qualitative Te s t (purpose for w hich itwas incorporated)1 ) O f a l l o r s ubstantially all of i ts property

Majority vote of Board of Director s( m a j o r i t y o f quorum) Ratified ora pproved by 2/3 of the OCS or 2/3 of the members

Relates to the primary purpose.2)Excep tion to Sec.40 if the sale isnecessary in t heusual and regu larcourse of busin essor if proceed

s of the sale or otherdisposition o f suchproperty and assetsbe appropriated forthe conduct of itsremainingbusine sses

Majority vote of Board of Director s(business judgmentrule Does not relate t op r i m a r y o r secondary purpose( 1 ) M u s

t comply with theBulk Sales Law Listing thec orporate creditors and the amount and nature of theirclaims

Failure renders t ransaction void(2) If no ratifi catoryvote of stockholders, itis an utra vires act of the third kind Yes, such a sale doesnot necessarily leas

toa dissolution of thecorporation and returnof the residual value of the corporation. Such isafforded as a matter of equity and fairness.Power to purchase

ownshares (Sec. 41)Buy back of shares (i)decrease the c ost of doing busi ness (ii)perpetu ate control of the enterprise.

Must be for a legitimate purpose example:(1)elimin ate fractional shares arising outof stock dividends( 2 ) c o l l ect or compro m i s e a n indebte

dness to the cor porationarising out of unpaid subscription in adelinquency sal e, and to purchas edelinquent shares during said sale and(3)to pay dis

senting or withdr awingNone

Revised Bagtas Reviewer by Ve and Ocfe 2Astockhold ers exercising th eirappraisal right Taken from URE only except redeemableshares

Power to inve s t corporate fund s inanother corporation orbusiness or for anyother purpos e (Sec.42) Approved by a majority vote of t

he Board of D irectors (majorityof quorum) Ratified by at least2/3 of the OCS As a general rule,section 42

appliesif the inves tmentis for secondary oro t h e r t h a n t h e primary purpose. Except if thei n v e s t m e n t i s re asonablyn e c e s s a r y t o accompli

sh itsprimary pur poseas stated in theA r t i c l e s o f Incorporation,ap proval of thestoc kholders is notnecessary as it isincluded in th eBusiness Judgmento f B o

a r d o f Director s Written notice of the proposedi nvestment andth e time and placeof meeting s hallbe addressed toeach stockhold

eror member at hisplace of residenceas sho wn in theb o o k s o f t h e corporat ion anddeposited to theaddressee in thePost Office withpostage prepaid orserved

personally. Yes, b ecause minusthe ratificatory votet he contract or transaction falls underthe realm of ultravires tran sactions of the third type.P o w e r t o d

e c l a r e dividends (Sec. 43) Cash dividends(1)Absolu tem a j o r i t y o f B o a r d o f Direct ors

inaccordancew i t h t h e Business Judgment Rule(2) Only declared outof the URE which shallbe payable in cash, inproperty or in stock(3) Howeve r, cashdividend

s due ondelinqu ent sharesshall be first appliedto the unpaid balancewhile stoc k dividendsshall be withheld untilfully paid Stock dividends

approval of 2/3 of Sec. 43 prohibits stock corporationf rom retaining su rplus profits inexc ess of 100% of t h e i r p a i d -

upcapital stock , EXCEPT:( 1 ) W h e n justified byd efinitecorporateexp ansionp r o j e c t s o r programs asa pproved bythe Board of Director s(2) When corporationis pro

hibited underany loan agreementf rom declaring dividends without itsconsent and such Yes.113

the OCS at a regular or speci almeeting called f orthat purpose.consent has not yetbeen secured or(3) When it ca n beclearly shown that

suchretention is n ecessaryu n d e r s p e c i a l circumst anceso b t a i n i n g i n t h e corporatio n such aswhen there is need forspecial reser ve forprofitableco ntingencies.Powe

r to enter intoma nagement contracts(Sec. 44) Approved by absolute majority of the Boardof Directors

Approved by stockholders owning majority of the OCSHOWEVER where:(1) Stockholders representing the same interestof both managing

and the managed corporationown or control more than 1/3 of the total OCSentitled to vote of the managing corporation OR(2) Where a m ajority of the me

mbers of theBoar d of Directors of the managing corporationalso constitute a majority of the members of theBoard of Directors of the managed

corporation. Then it must be approved by the stockholders of the managed corporation owning at least 2/3 of the OCSEXCEPT if the corporation is

organized primarilyas management company. Not for a period longer than five years for anyone term.