Close Corporations

Consequences when stockholders rather than board of directors manage a close

corporation:
1. No meeting of stockholders need be called to elect directors.
2. Unless the context clearly requires otherwise, the stockholders of the corporation
shall be deemed to be directors for purposes of applying provisions of this Code.
3. The stockholders of the corporation shall be subject to all liabilities of directors.

Any stockholder can petition for dissolution in the following cases:
1. Acts of directors, officers or those in control of the corporation is illegal, fraudulent,
dishonest, oppressive or unfairly prejudicial to the corporation or stockholder.
2. Corporate assets are being misapplied or wasted.

Preemptive right extends to all stocks to be issued including (unless articles of incorporation
provides otherwise):
1. Reissuance of treasury shares
2. Money, property or personal services
3. Payment of corporate debts

Election is carried out by stockholders.

Special Corporations

Schools recognized by government must be incorporated under the Corporation Law.

Temporalities money revenues of a church, derived from pew rents, subscriptions,
donation, collections, cemetery charges and other sources.

2 Kinds of Religious corporations:
1. Corporation sole may be formed by the chief archbishop, bishop, priest, minister,
rabbi or other presiding elder of such religious denomination sect or church.
2. Religious societies aggregate religious corporation, as distinguished from the
corporation sole.
a. Religious society
b. Religious order
c. Diocese
d. Synod
e. District organization of any religious denominations, sect or church

Corporation Sole

Effect of Incorporation all temporalities, estate and properties of the religious
denomination, sect or church theretofore administered or managed by him as such chief
archbishop, bishop, priest, minister, rabbi or presiding elder shall be held in trust by him as
a corporation sole for the use, purpose, behalf and sole benefit of his religious
denomination, sect or church, including hospitals, schools, colleges, orphan asylums,
parsonages and cemeteries thereof.

Purpose of Corporation Sole: a special form of corporation usually associated with the
clergy.

2 Corporation Soles in the Philippines:
1. Roman Catholic Church
2. Iglesia ni Cristo

Who may become religious corporations sole:
1. Chief archbishop
2. Bishop
3. Priest
4. Minister or rabbi
5. Presiding elder of any religious denomination sect or church