Marcko C.

Lim
Second Year

1.

Corporation Law
Dean Rommel G. Oliva

After the application for corporation has been approved, the corporation is
given by law a period of two (2) years from the date of its incorporation to formally
organize and commence the transaction of its business or construction of its
works.
If such failed to comply with it, its corporate powers cease and the corporation
shall be deemed dissolved.

2.

As a general rule, the board of directors shall not receive any compensation
except for reasonable per diems and except as those provided in their provision
of by laws which fixes their compensation. Provided however, that any such
compensation other than per diems may be granted to directors by the vote of the
stockholders representing at least a majority of the outstanding capital stock at a
regular or special stockholders meeting.
In addition, In no case shall the total yearly compensation of directors, as such
directors, exceed ten percent 10% of the net income before income tax of the
corporation during the preceding year.

3.

Under the law, contract entered by interlocking directors is valid, but such may
be invalidated when the contract that have been entered between corporation by
interlocking director is done through fraud and such contract entered is not fair
and reasonable.

4.

The power to sue through the exercise of corporate power lodged under the
law to the board of directors. All corporate powers are exercised, all business
conducted and all properties are controlled by the board of directors. A
corporation has a separate and distinct personality from its directors and officer
that can only exercise its corporate power through the board of directors.

5.

The refusal of the corporation to the stockholder for inspection of its corporate
books and records on the said grounds are not valid. Under the law, a corporation
may only refuse to a demand for inspection of corporate books and record, if a
person securing an inspection of books and records was not acting in good faith
or not for a legitimate purpose in making his demand.
In case the officers of the corporation wrongfully denies a stockholder or
member of the right to inspect corporate books or records, the usual remedy to

enforce such right is by filling an action via petition for mandamus against the
corporation. The secretary should be included as party defendant since such
official is customarily charged with the custody of all documents and records of
the corporation against whom personal orders of the court would be made.
6.

The methods or modes of corporate dissolution are the following:

Voluntary- It may be effected:
a.

By the vote of the board of directors/trustees and the

stockholders/members, where no creditors are affected.
b.
By judgment of the Securities and Exchange Commission after hearing
of petition for voluntary dissolution, where creditors are affected.
c.
By amending the articles of incorporation to shorten the corporate term.
d.
In the case of a corporation sole, by submitting to the Securities and
Exchange Commission a verified declaration of dissolution for approval.
Involuntary-It may be effected:
a.
b.
c.

By expiration of term provided for in the original articles of incorporation.

By legislative enactment
By failure to formally organize and commence the transaction of its
business within two (2) years from date of incorporation
d.
By order of the Securities and Exchange Commission.