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CORPORATION CODE Corporation- artificial being created by operation of law having the rights of succession, the powers and

d attributes which are expressly conferred by law or incidental to its existence There are 2 kinds of persons: o o Natural juridical persons (artificial beings)- state and its political subdivisions, partnerships, and corporations Partnership vs. corporation Manner of creation- partnership created by mere agreement of the partners except if the capital contribution more than 3k CC requires that partnership agreement be in writing and filed with SEC or when real property is contributed regardless of value or title, partnership agreement must be in a public instrument otherwise void; a corporation is either created by law or by operation of law o Corporations created by law- generally speaking, GOCCs. TNCC is created by operation of law. Corporations created by operation of law- generally speaking, private corporations. PNB is created by law.

What name may be used- whether it be a partnership or corporation, the name should not be similar or confusingly similar with the name of another existing partnership or corporation. o Corporations- corporate names should have the word corporation or the word incorporated as part of the corporate name. Pwedeng abbreviated. The word corporation need not be at the end, it can be anywhere. SC: involves the word Phillips. A Phil. Corp used the word Phillips as part of its corporate name. The business is conveyor belts.SC ruled against the

Phil.corp. and contradicted its own ruling that no person has the exclusive right to use a surname. o Partnerships- wala ang words na corporation or incorporated

Purposes: o o Partnership- always for profits Corporation- may not be profits. Ex. Educational corporations, corporation sole, eleemosynary corporation

As to the number of organizers: o Corporation- generally speaking, a minimum of 5 and a maximum of 15. Corporation sole has 1 organizer who is the head of religious sect or denomination. El Shaddai not a corp sole Partnership- 2 is enough, no maximum

Term of existence: o o Partnership- partners may agree on any term Corporations- incorporators cannot agree on any term longer than 50 years

Extent of liabilities: o Partnership- general partners could be obliged to pay partnership obligation even if they already paid their subscriptions Corporations- generally speaking, SH cannot be obliged to pay if already paid his subscription

Sharing of profits: o Partnerships-profits and losses are shared according to agreement of partners Corporations- dividends distributed to SH pro rata.


Partnership- by all the partners and decisions are made by the partner or partners having the controlling interests Corporation- decisions are made by a majority of a quorum in a meeting of the board. Every director has only one board regardless of his holdings.

Causes of dissolution: o o Partnership- may be dissolved at will of anyone Corporation 1. Resolution of the board. Must be ratified by at least 2/3 of all outstanding shares.

Who may organize a corporation? Organizers of a corporation are called organizers These organizers become known as incorporators once the articles of incorporation is signed Only natural persons may be incorporators. All should be of legal age, must have capacity to contract (although the law does not say this), majority should be residents of the Phil, not necessarily citizens unless a special law requires a bigger participation of citizens. Generally speaking, retail trade is for Filipinos. Why just natural persons? Juridical persons cannot sign the articles of incorporation. An incorporator is one of those who signed the AOI and at the time he signs, he is also a corporator. A corporator is a part of the corporation and he may or may not have signed the AOI. He could have joined the corporation later on. If an incorporator leaves the corporation, he ceases to be a corporator but hes still an incorporator. Corporator and incorporator are applied to both stock and nonstick corporations. Corporator in a stock corp- that corporator is better known as stockholder or a shareholder

Corporator of a nonstock corp- called a member Stock corporation o o Must have authorized capital stock divided into shares; and Authorized to declare dividends from surplus profits

Nonstock corporation- does not meet the 2 requirements How do you form a corporation? You file with the SEC the AOI (not very accurate) and other documents required by the SEC. STOCK Corpo, documents: o You fill up a name verification slip. This is approved by a computer. Have the name reserved for at least 30 days. Letter size ang documents. AOI Treasurers affidavit Undertaking to change corporate name- words are spelled in different ways so the name may appear later on to be similar or confusingly similar with the name of another existing corp Registration Data Sheet (form ng SEC)

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NONSTOCK, documents required: o o o o Name verification slip AOI Undertaking to change corporate name Modus operandi- short rite-up about how the nonstock corp will be operating Registration data sheet

Articles of incorporation- written agreement of the organizers of the corporation and must contain all that are required by law As per law, 10 articles (how stipulation is identified). You can have more but not less.

Art 1 is about the corporate name. Rules: corporate name should have the words corporation or incorporated whether abbreviated or fully-spelled corporate name should not be misleading or misdescriptive of the business of the corporation only corporations under the supervisions of the monetary board may add to its corporate name the word bank or banking the word insurance is reserved for corporations under the supervision of insurance commissioner You cannot anymore use the words Philippine, National, Republic, State as the first word of the corporate name. Exclusive use of the Philippine Government.

Art 2 is about the purposes of a corporation Corporation can only have one primary purpose although it may have any number of secondary purposes for as long as they are not incompatible with the primary or with another. Ex. Primary is banking, you cannot have for your secondary insurance as insurer (expressly prohibited in Gen. Banking Act of 2000).

Art 3 is about the term of a corporation. The maximum term is 50 years, no minimum. Corporate term may be extended before it expires. Filing fees were as if youre forming a new corporation. No limit as to number of extensions. So a corporation may have a perpetual existence. You cannot have an extension earlier than 5 years before it expires unless theres a justifiable reason. Art 4 is about the principal place of business of a corporation. Exact address of a corporation should be stated as its principal office. Art 5 is about the name, nationality, and complete address of the incorporators whose number must be at least 5 and at most 15 whether stock or nonstock. Complete address may be a residential address or office address. If sobra, papirmahin nalang yung sobra as witness. Art 6 consists of 2 parts. 1st part- number of directors. 2nd part- full name, nationality, and complete address of incorporating directors.

Stock- any number from 5 to 15, even or odd. Nonstock- simply at least 5, you can have any number of directors. Even or odd. Must be a member.

Incorporating directors should have subscribed.

The 1st 6 articles common in stock and nonstock. o Stock- 1st part- the amt of authorized capital stock (always expressed in pesos), number of shares, value assigned to every share. 2 nd partenumerates the subscribers.

ACS- maximum Unless a government regulator prescribes a minimum paid-up, the minimum can be agreed upon by incorporators. Shares- unit of participation. Min par value that may be assigned to a share- one centavo (least denomination of our currency system. No maximum. Stock split- par value hahatiin sa gitna. One share will become two shares but with a lower par value. To enable small investors to buy shares according to min lot. Reverse stock split- for ex. 50 shares will be only one share.no effect in holdings of a stockholder, nabawasan lang ang number of shares pero value nag-increase. In investing in stock market, may minimum lot and price.

At least 25% of ACS should have been subscribed and at least 25 % of that is paid-up. Subscribers need not be natural persons. It can be any number.

Nonstock- contributors or donors and the amount they have individually donated or contributed to corporation.

Art 8 mentions the name of subscribers and opposite it is the amount individually paid which is at least 25% of the amt subscribed.

Name of the treasurer.

Applicable only to corp the business of which is reserved to Filipinos

Midterm: Theory of relativity not patentable- formula not patentable

When the documents have filed with SEC, it is assigned ti an examiner to determine whether or not in accordance with law and rules. SEC then issues certificate of registration just like in a natural person. But natural person still has juridical personality even without that certificate while a juridical person has none. Date of filing of documents is the date of registration. Properties acquired by corporation belong to the corporation and even the controlling SH cannot validly claim that he is a part-owner unlike in partnership where partners are considered co-owners of properties registered in the name of the partnership. Corporation can incur liabilities. What if corpo had gone bankrupt and cannot pay its obligations. May the creditors sue SH? Gen. no, corp has separate personality. But the SH who are not fully paid their subscriptions can be obliged to complete the payment of the subscriptions. Unpaid subscriptions are considered receivables or assets of the corporation and therefore may be garnished by creditors. Unpaid subscriptions are recorded as a subscription receivable.

Based on jurisprudence, on some occasions, separate personality may be set aside and obligations may be imposed on SH and officers of corpo---piercing the veil of corporate entity(disregarding the separate personality of corpo and making its liabilities the liabilities of SH, controlling SH, officers of corporation). Piercing the corporate veil o Not because the person has controlling interest that in case of insolvency, that controlling SH will be obliged to pay (controlling SH presented evidence that he did not make decisions alone but by board of directors; presented minutes of mtgs of the board) Separate personality may be disregarded only when theres clear and convincing evidence that corpo organized purposely to commit fraud, tax evasion, or to defeat public convenience Separate personality may be set aside when theres clear and convincing evidence that copro merely an alter ego of controlling SH When there is clear and convincing evidence that of 2 corpo, one is considered a mere instrumentality of the other (Concept Builders Inc case).

BY LAWS o This is the set of house rules and regulations. Codified simultaneously together with the incorporation documents, of that is the case, all incorporators should sign the by laws. If by laws not ready for filing with corpo documents, it shall be filed within 1 month from issuance of cert. of registration, it should be signed by a majority of incorporators. Matters stated in bylaws: Relating to meeting A corpo has an annual mtg which is known as its regular mtg. Notice not required though in practice, corp sec. still issues reminders of the meeting. Bylaws should state the day of the annual mtg. If calendar year, usually, annual mtgs held after financial statements are audited (after April 15) and audited financial statement is ready. If fiscal year, filing of ITR usually after 4 mos from the end of fiscal year.

Date of annual mtg, dont say feb 13, 20, may 7all these dates will fall on sat or sun in the future. You can say the annual mtg shall be on 3rd Thursday of April. A corpo may have special meetings to be called by the Pres. There is a need of written notice stating the date of the meeting and the matter or matters to be taken up. No other matter may be taken up without the consent of all those present. What about the venue? Annual mtgs: if principal office can accommodate all, then in that office. If not, it may be held elsewhere in the city. Municipality where corpo has its principal office. Attendance: in person or by proxy. A proxy arises from a contract of agency. In every mtg of a stock corpo, there must be present in person/by proxy, a SH or SHs representing the majority of the outstanding shares. Outstanding shares- all shares issued excluding treasury shares. Treasury shares- shares already issued by corpo but which was later on reacquired by the corpo in its own name. Once shares are subscribed, they are considered issued. Once issued, it means outstanding. 1M ACS, subscribed 250 thousand. Corpo issued another 300thousand. 550 thousand subscribed, issued, and outstanding. Board declared 20% stock dividends (110, 000 shares or 20% of 550, 000). How many shares have been subscribed? 550k pa rin. Yung 110k hindi naman babayaran, hindi yan subscribed. How many shares have been issued? 660k. How many shares remain unissued? 340k. How many outstanding? 660k. if a SH donated 20k shares to corpo, 640k nalang outstanding, 20k treasury shares. How many shares should be represented for there to be a quorum? 640k/2 + 1 share.

Pag subscribed na, hindi nayan nauunsubscribed. If youre sending a proxy, your proxy should bring along with him a proxy (written authority). Form of the written authority: handwritten or printed. No need to be notarized. The proxy should go there before the mtg to present the proxy before corp sec. Corp sec will check the signature. Proxy pwede sa stock and nonstock unless the bylaws of nonstock prohibits such. Quorum in every mtg is determined at the start of the mtg. if at the start, theres a quorum, mtg proceeds. If theres none, mtg is adjourned. A proxy may be revoked expressly or impliedly. May be revoked at anytime except when proxy issued pursuant to a contract. o o EXPRESSIMPLIED-pag ang SH personally attends the meeting.

Term of a proxy: may be for just one meeting. It could also be for a period but which period should not be more than 5 years. Maybe extended for another 5 years. Quorum in a non-stock corp: o It could be a simple majority of the members.

Quorum should be defined in the bylaws. If magdadagdag pa ng members ang corpo, idefine mo na ang quorum sa bylaws for ex. The quorum shall be the presence of 20 members. The presence of any number of members shall constitute a quorum.- valid. Annual meetings in the bylawsnakalagay na agenda. Most important agenda is the election of directors for the following year. In stock corpo only, there is another mode of voting called voting trust agreement.

Proxy vs VTA o Form: proxy may be in a private; voting trustpublic instrument Proxy filed with corpo sec; VTA filed with SEC In a proxy, the proxy takes instructions from SH on how to vote, while in VTA, the voting trustee decides how to vote.

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Maximum term of VTA is also 5 years.

Relating to directors One should have all the qualifications in the law and bylaws and none of the disqualifications in the law and bylaws. Qualifications under the law o Must own at least 1 share. Its enough that a person subscribed to one share. Not required that he has paid up for it. Common or preferred? The law does not qualify. Preferred shares- no right to be elected director, so must own at least 1 common share.

Disqualifications under the law o Sentenced by final judgment to suffer imprisonment of more than 6 years Committed violation of corpo code during the last 5 years

Disqualifications under the bylaws o

Term of directors- refer to the bylaws. If theres nothing in the bylaws, the term is year to year. Exc. directors of an educational corporation, under the law, the regular term is 5 years.

If there would be a vacancy and somebody is elected to fill in the vacancy, that person will serve only the unexpired term of his predecessor. Are directors entitled to regular compensation? GR: no. Exc: when in the bylaws, there are given regular compensation or when the directors pass a resolution giving themselves regular compensation which is ratified by the SH. Law provides that directors may receive reasonable per diems for attending meetings of the board. Per diems depend on the resources of the corporation. On top of the per diems, the law allows the directors to share on the net profits of the corpo. The directors may not receive more than 10% of the net profits before income tax. If there be a vacancy in the board, that can be filled up in 2 ways: o If the remaining directors still constitute a quorum, they may fill in the vacancy by electing who are qualified for the directorship If no quorum, they will call a special meeting of SHs and SHs will elect the director/s

Removal is automatic if a person loses his share in the corp. you cant be a dir by buying all the shares of a dir. You must be elected. A director may be removed with or without cause in a special mtg by SH representing at least 2/3 of the outstanding stocks except if the person to be removed represents minority SH in which case he may be removed only for a valid cause. What is the mode of voting in a stock corpo? o Cumulative voting- one share equals one vote x the number of directors to be elected. Whatever number that may be, all those votes can be cast in favor of one person.this is to enable minority SH to elect a rep in the board

Voting in nonstock- one member equals one vote x the number of directors to be elected but a member may not cast more than 1 vote for a candidate. May a director enter into contract with a corpo in which board he sits? YES o A director may eneter into contract with a corpo in which board he sits provided that 1. His proposal was approved in amtg of the board in which mtg there was a quorum without counting his presence and his contract was approved by a majority of the quorum without counting his vote 2. Terms and conditions must be clear and reasonable

Interlocking directorate- 2 or more corp having common directors

Relating to Officers Basic officers: President, Treasurer, Secretary Other officers: those mentioned in the bylaws President o o Must be one of its directors, a stockholder Cannot be at the same time a treasurer or a secretary

o Other officers: nothing in the law that requires them to be a director or SH Secretary: have little to do unless in publicly listed corporation Treasurer may at the same time be a secretary A person may hold two or more compatible offices Examples of incompatible offices

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Treasurer cannot be auditor Chief accountant cannot be the auditor

Whats the term of an office? Refer to the bylaws since it may provide the term. If none in the bylaws, an office is coterminous with the board that filled it up. An officer holds office at the pleasure of the board. Officers are entitled to regular compensation and the compensation is determined by the board of directors. When a director is at the same time an officer, as an officer, he may receive regular compensation. An officer may be removed. If an officer who was removed and he wants to contest this, before which body? Complaints of directors or officers about their removal are considered intracorporateRTC May an officer enter into contract with corpo where he holds office? YES, under the same conditions as contracts between directors and the corpo

Stock cert (stock corpo) The same as a certificate of stock once issued it is the same proof of full payment of ones subscription to the capital stock of the corpo When is it issued? Upon full payment of ones subscription. It cannot be used for the number of shares corresponding to the payments made if such payments do not constitute full payment. It is one indivisible contract. Who signs a stock cert? The secretary. It is registered in stock and transfer book. Other signatiories: the president or anyone else authorized by the board or bylaws. Publicly listed corpo- stock cert no longer individually signed by the cert and other officers. May initials ng persons who prepared the stock cert. Printed na ang signature. How should you handle a stock cert? In the same manner as in the cert of title over land. If you lose it, you may not be able to get a replacement right away. What if lost? 1.

Execute an affidavit of loss and file it with the corporate sec.2. Cause a publication of a notice of loss once a week for 3 consecutive weeks in a newspaper of gen. circulation. From the date of last publication, theres a waiting period of one year. The replacement stock cert will be issued after one year. To get it earlier, you have to post a bond for the value of the shares represented by the lost stock cert. How do you transfer shares? If the shares were issued by a publicly listed corpo, the SH has to endorse only the stock cert. if not listed in the stock exchange or there would be an over-the-counter transaction between the parties, the parties will have to prepare a deed of sale. Tax consequence: listed in stock exchange and thru brokers, the seller and buyer pay stock transfer tax (half percent each). Over the counter transaction: seller who makes a profit pays capital gains tax (based on actual gains) Corporate seal

Amendments of articles or bylaws Board resolution then ratification of at least 2/3 of ALL outstanding shares (including preferred); nonstock- 2/3 of members, if by laws: at least a majority is required

Preferred stock- shares which enjoy a privilege/preferences. Usual preferences: as to dividend and as to asset o Preferred as to dividend- when a corpo is being organized, its shares are all common because it doesnt have a history of profitability When do corpo usually issued preferred shares? When it wants to raise money to finance its expansion programs. Usually this money is sourced from the public. Why not from banks? May interest (fluctuating), regular amortization, you have to tie down a lot of assets to secure the loan (usually at least twice the amount loan). The need for the money is usually temporary. Preferred redeemable- preferred shares which upon issue by the corpo, it has reserved the right to reacquire them within a certain period.

How do you call the amount that you receive on preferred shares? Dividends. Rate of return of stock investments is called dividends. Could be paid if corpo has surplus. Preferred redeemable convertible if not reacquired by the corpo within a certain period, the SH if he wants may have this preferred share converted into common.

Pre-emptive right his right to be given preference or priority to subscribe to new issues of shares of the corpo o o o ACS- 1M; 250K subscribed; 750 K unissued Df re

to enable the present SH to maintain the present ratio of their holdings in the corpo Not strictly personal although they are personal properties. They arise from stock ownership May it be waived? Yes. They are also transferrable (onerous or gratuitous) Are they absolute right? No, there are times when they are not available. When are they not available? o o When provided in the AOI or bylaws when new shares are issued to pay for the properties that corpo needs but for which property the owner is paid in shares when new shares are issued to comply with a legal requirement that a corpo go public ex. Universal bank (at least 10% of ACS should be available for subscription of others) When new shares are issued pursuant of a stock option plan for officers and/or employees of the corpo

Dividends o Earnings on stock investments are called dividends

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The power to declare dividends belong only to the board of directors Executive committee- directors who are members if they are functioning as executive committee cannot declare dividends. At least 3 mem are directors? May be declared only if corpo has surplus profits Surplus profits- refer to net profits after income tax without any impairment or diminution of the paid-up capital. If paid up diminished in prior years, corpo has to made up for this diminution before can declare dividends. Paid-up capital/paid-in- total amount paid by stockholders on their subscriptions How is paid-up capital impaired or diminished? Impaired or diminished by the losses. Copy from haze the examples- losses

When should a corpo declared dividends? No law that requires the board to declare dividends. SC: no court can declare a corpo to declare dividends since its an exercise of business judgment In what form may this be paid? Cash: Requirement for distribution: declaration of the Board and can also fix the date of distribution in the same mtg Property- dividends paid using properties of the corpo; board resolution Stock- If a corpo had bought its own shares and accumulated a lot, those shares are treasury shares and they are properties of the corpo. If the corpo would use its treasury shares in payment of dividends, it is called property dividendsneeds declaration of board and in the same meeting it can already set the distribution. Stock dividends come from unissued shares. When a corpo will use its own shares as dividends (whether stock or property), before the board could distribute this, need a ratification of at least 2/3 of the outstanding common SH. Why is there a need for ratification? When a corpo declares such kind of dividend, SH will in effect suffer dilution in their investment. When would you subject to income tax on the stock dividends? When you sell.

The corpo does not distribute all the surplus profit, only a part. Retained earnings ang tawag sa tira. If a portion of retained earnings has been set aside for a definite purpose, its called restricted retained earnings. The part not set aside is called unrestricted retained earnings.

Watered stocks o Shares issued by the corpo but for which share the corpo did not get the full fare value. Liabilities: when there would be unpaid creditors and they learn that watered stocks are issued. They may run after the person who received the watered stock and also the directors who did not object to the issuance of the watered stock. The liability is solidary. If abstain? Still liable.Kailangan mag-object. If a dir learns the issuance of a watered stock, he should file a written objection with the corporate sec Df

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Appraisal right o Right to demand payment of the fare value of his shares under certain conditions: Resolution of the board authorizing any of the ff: An amendment of the articles or bylaws limiting or restricting existing rights of SH or authorizing investment of corporate funds in another corporation or authorizing the sale or disposition of all or substantially all of the assets of the corpo or a merger or consolidation

That resolution was ratified by the required number of votes The SH demanding payment of his appraisal right should have voted against ratification

He demands payment of appraisal right within 30 days from ratification Corpo should have sufficient surplus

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Fare value of the share Value can be Par value- constant Book value- fluctuates; determined by looking at the balance sheet of the corpo

Why is there a need for a surplus? If no surplus and corpo will pay appraisal right, there would be a violation of the trust fund doctrine One exception: when the corpo redeems its redeemable preferred shares (by express provision of law). But should not redeem if after redemption, it can no longer carry-out its primary purpose.

Trust fund doctrine- all subscriptions both paid or unpaid constitute trust fund for the benefit of the creditors of corpo After corpo pays you, the corpo now owns the shares, they become treasury shares When do shares become treasury shares: When corpo eliminates fractional shares in stock dividend Fractional share- share less than 1 whole share

When the corpo redeems its redeemable preferred shares When the corpo pays the appraisal right of the SH When the corpo bids for its own shares in a delinquency sale When the corpo buys back its own shares from the open market Other modes of acquiring prop (sale, donations)

Treasury shares do not have voting rights and do not participate in dividends

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Are treasury shares asset or liability? Asset. When sold, treasury shares become regular shares again. Buyer can vote and participate in dividends Will it be good for the SH for a corpo to have a lot of treasury shares? Yes, because the book value becomes higher (total asset- total liabilities/number of outstanding shares) When do shares become delinquent? When they are not fully paid accdg to the subscription agreement or upon call of the corporation. Every subscription agreement is considered as one indivisible contract. Hence, entire shares will be delinquent and not just those corresponding to the unpaid. If no date of payment is mentioned for the balance, when should it be payable? Payable on demand (call) Remedy of corpo in case of delinquency? File a case in court for specific performance to collect the unpaid amt With what court? RTC kahit any amount (intracorporate dispute) Sell the delinquent shares in a public auction (delinquency sale). Shares are sold to the highest bidder. All bidders should be able to pay the amt demanded by the corpo, nothing more nothing less. The bidders will then indicate the number of shares they are willing to receive for that amount. o o B1: 48K for 100k shares B2: 48K for 60k shares; the 40K shares will go to delinquent subscriber

Theres auction sale but no bidders, the corpo may bid but corpo must have sufficient surplus otherwise violation of trust fund doctrine

Mergers/consolidation o Merger: union of 2 or more corpo where one survives and the other is dissolved

Consolidation: union of 2 or more corpo where all will be dissolved and a new one created Why merge/consolidate? To meet min capital of the government regulator For better profits For better business opportunities For better corporate image

How do you go about merger/consolidation? The board of the corporations will pass their respective resolution for the merger These corporations will present to their respective SH that resolution for ratification. Need at least 2/3 vote of all outstanding capital stocks (kasama preferred) Lawyers will prepare the articles of merger/consolidation Purpose Term No change in art5 Place of business could change ACS will increase; number of shares will change; there might be a change in the par value Art8 wont change Shares of the corpo which will be dissolved will be replaced with the shares of the surviving corpo/new corpo so they have to agree with the valuation of the shares for the purpose of exchange of shares

What do you do with the articles of merger/consolidation? If banks, forward 1st to monetary board Insurance companies, forward 1st to insurance commissioner

Other corpo, file right away with SEC

When does merger/consolidation become effective? Upon approval of SEC of the articles of merger/consolidation

Dissolution o What may cause dissolution? Expiration of the term When the SEC cancels the cert of registration of the corpo for any of the ff causes: Failure to file the bylaws within 30 days from issuance of the cert of registration Failure to organize within 2 years from issuance of cert of registration Failure to carry out the primary purpose of the corpo for at least 5 years Failure to comply with the reportorial requirements of the SEC All of these must be without justifiable reason Strict observance of due process

When the court orders the dissolution upon finding that it is already insolvent or organized to perpetrate fraud

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Liquidation/winding up process: how long? Only God knows. Residual assets will be given first to preferred SH. Prorating takes place if assets not enough. If sobra, ang tira will be given to common SH Foundation enjoys tax benefitsthey will receive donations not subject to tax. Once dissolved, residual assets will be escheated to the govt Nonstock corpomembers will get residual asset Liquidating dividend- what the SH will receive as their share in the residual asset of the corpo. LD taxable? To the extent of mere return of capital, not income. Any excess, taxable.

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Are dividends considered fruits? Yes. Fruits Natural Industrial Civil