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ARTICLE 43

POWER TO DECLARE DIVIDENDS


ARTICLE 44
POWER TO ENTER INTO
MANAGEMENT CONTRACT

Renato T. Asi Jr.


Gabrielle O. Bantegui
DIVIDENDS DIVIDENDS
RETENTION OF SURPLUS
PROFITS REPORT TO SEC

Section 43 prohibits stock corporations from Any declaration of dividends, whether


retaining surplus profits in stock of 100% of their
paid-up capital stock, except in the following cash or stock, shall be reported
situations within 15 days from the date of
 When justified by definite corporate expansion declaration. Corporations whose
projects or programs approved by the Board of
Directors;
shares or securities are listed in the
 When the corporation is prohibited under any stock exchange or registered &
loan agreement with any financial institution or licensed under SRC, the report shall be
creditor, whether local or foreign, from declaring filed to the SEC before or
dividends without its/his consent and such
consent has not yet been secured; simultaneously with the release or
 When it can be clearly shown that shown that publication of the notice of the
such retention is necessary under special declaration dividends to stockholders.
circumstances obtaining in the corporation, such
as when there is need for special reserve for
probable contingencies.
DIVIDENDS ARTICLE 44
RESTRICTIONS ON BANKS POWER TO ENTER INTO
MANAGEMENT CONTRACT
Under Sec.57 the General Banking Law 2000, no No corporations shall include a
bank for quasi-bank shall declare greater than its management contract with another
accumulated net profits then on hand deducting corporation, unless such contract shall have
there from its losses and bad debts. Neither shall
been approved by the Board of Directors
the bank or quasi- bank declare dividends
and by stockholders owning at least the
 Clearing account with the BSP is overdrawn
majority of the outstanding capital stock,
 Deficient in the required liquidity floor for or by at least a majority of the members in
government deposits for 5 or more consecutive
the case of a non-stock corporation, of
days;
both the managing and the managed
 Does not comply with the liquidity
corporations, at a meeting duly called for
standards/ratios prescribed by the BSP for
purposes of determining funds available for
the purpose.
dividends declaration No management contract shall be entered
 Committed a major violation as may be into for a period longer than 5 yrs for any
determined by the BSP one term
TICLE 44: POWER TO ENTER INTO MANAGEMENT CONTRACT ARTICLE 44: POWER TO ENTER INTO MANAGEMENT
RATIFICATION REQUIREMENTS
CONTRACT WHEN
COVERAGE OF MANAGEMENT THERE IS COMMON CONTROL OF
CONTRACT INVOLVED CORPORATIONS

Does not cover every contract  A stockholder/s representing the same


denominated as “Management interest of both the managing and the
Contract”. The rules apply only to every managed corporations own or control
contract whereby a corporation more than 1/3 of the total
undertakes to manage or operate all or outstanding capital stock entitled to
substantially all of the business of vote o the managing corporations
another corporation, whether such  A majority of the members of the
contracts are called service contracts, Board of Directors of the managing
operating agreements or otherwise. corporations also constitute a majority
However, such service contracts or of the members of the Board of
operating agrements whch re Directors of the managed corporation
TICLE 44: POWER TO ENTER INTO MANAGEMENT CONTRACT

RATIONALE FOR RATIFICATION


REQUIREMENTS

2. On Part of Managing
Corporation
1. On Part of the Managed
Corporation