RA 11232 - Attributes and Basic Concepts

Question 1

R.A. NO. 11232

It is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.

Answer 1

Corporation

Question 2

R.A. NO. 11232

Corporation is an artificial being:

✓ Implications of corporation for being artificial being?
✓ Doctrine of separate personality means that?
✓ Limited liability rule means that?
✓ Trust fund doctrine means that?
✓ Explain Doctrine of Piercing the veil of corporate fiction as an exception to doctrine of separate personality

Answer 2

Individual Q&A on the following cards…

Question 3

✓ Implications of corporation for being artificial being?

Answer 3

• The corporation cannot be held criminally liable particularly the penalty of imprisonment, but it may be held liable for fines for corporate crimes. The corporate officers who approve the particular corporate crime will be the ones to be held criminally liable.
• As a general rule, a corporation is not entitled to moral damages because, not being a natural person, it cannot experience physical suffering or sentiments like wounded feelings, serious anxiety, mental anguish and moral shock except when a corporation has a reputation that is debased, resulting in its humiliation in the business realm such in the case of civil action for damages on the ground of libel or defamation.
• The corporation is not entitled to constitutional right against self-incrimination.

Question 4

✓ Doctrine of separate personality means that?

Answer 4

a corporation has a personality separate and distinct from the stockholders
and affiliated companies.

Question 5

✓ Limited liability rule means that?

Answer 5

Limited liability rule means that the stockholders are liable only up to the extent of their capital contribution when it comes to corporation’s liabilities.

Question 6

✓ Trust fund doctrine means that?

Answer 6

means that assets of the corporations are considered trust fund reserved for payment of liabilities to creditors of the corporation.

Question 7

✓ Explain Doctrine of Piercing the veil of corporate fiction as an exception to doctrine of separate personality

Answer 7

• Fraud cases – When corporate fiction is used to commit fraud.
• Alter ego cases – When the corporation is a mere instrumentality or alter ego of the stockholders or owners.
• Defeat public convenience cases – When the corporate fiction is used to commit tax evasion or to justify a wrong or to defend a crime.
• Equity cases – In case of labor cases in order to promote social justice.

Question 8

The corporate name shall contain the word

Answer 8

“Corporation” or “Incorporated,” or the abbreviations “Corp.” or “Inc.”

Question 9

The partnership name shall bear the word

Answer 9

“Company” or “Co.” and if it is a limited partnership, the word “Limited” or “Ltd.”

Question 10

1. Authorized shares are
2. Outstanding shares are

Answer 10

1.the maximum number of shares a company is allowed to issue to investors as laid out in its articles of incorporation

2.the ACTUAL SHARES ISSUED or sold to investors from the available number of authorized shares INCLUDING which are subscribed and not yet fully paid BUT excluding treasury shares

Question 11

Corporations are distinguished from partnerships in that

a. The liability extends up to private properties
b. Created by agreement
c. No dissolution in case of death, withdrawal or resignation of the owner
d. Interest or ownership is transferable only if the owners consent

Answer 11

c. No dissolution in case of death, withdrawal or resignation of the owner

Question 12

______ is a corporation which has capital stock divided into shares of stocks and are authorized to distribute to the holders of such shares dividends or allotments of the surplus profits on the
basis of the shares held

_______is a corporation where no part of its income is distributable as dividends to its members and the capital of the corporation is not divided into shares of stocks

Answer 12

stock corporation

non-stock corporation is

Question 13

It refers to a corporation with a single stockholder

Answer 13

One person corporation (OPC)

Question 14

Religious or Ecclesiastical Corporatons

A ______is a religious corporation which consists of one member only or his successors

A _____n is a corporation organized for a purpose other than for religious

Answer 14

Corporation sole

lay corporation

Question 15

A lay corporation is a corporation organized for a purpose other than for religious.

This may further classified as:

Statement 1: A _____ corporation is a corporation established for business or profit

Statement 2: An ______ corporation is a corporation established for charitable purposes

Answer 15

Civil

Eleemosynary

Question 16

A____ is a corporation organized under the laws of the Philippines

A ___is a corporation organized under laws other than those of the Philippines

Answer 16

domestic corporation

foreign corporation

Question 17

Type of a corporation that is not required to file articles of incorporation to obtain juridical
personality as a private corporation

Answer 17

Corporation by prescription
(Religious Org.)

Prescription means passage of time
Kasi nandyan na yan dati pa. Mas nauna pa satin or sa SEC

Question 18

______refer to the persons mentioned in the Articles of Incorporation as originally
forming and composing the corporation, having signed the Articles and acknowledged the same before notary public

Answer 18

Incorporators

Question 19

1. _______corporation refers to all persons who assume to act as a corporation knowing it to be without authority. It has no juridical personality. It has no corporate existence and is not considered an artificial being in contemplation of Revised Corporation Code
2. The status of contract entered into between an ostensible corporation/corporation by estoppel
   and another person valid and binding by reason of estoppel on both parties. TorF?

Answer 19

Corporation by estoppel or ostensible

Question 20

Explain

1. A de jure corporation
2. A de facto

Answer 20

refers to a corporation which actually exists both in fact and in law. It has complied with all the requirements of law and therefore its juridical personality is not subject to the direct attack by the state through quo warranto proceedings

refers to a corporation which actually exists for all practical purposes as a corporation but which has no legal right to corporate existence as against the State since it has not complied with all the formalities or requirements provided by law. This corporation has a corporate existence but its juridical personality may be directly attacked by the state through quo warranto proceedings

Question 21

Statement 1: Persons who have agreed to take and pay for original unissued shares of a corporation formed or to be formed are called ___

Statement 2: Persons who bring about or cause to bring about the formation and organization of a corporation by bringing together the persons interested in the enterprise are called____

Answer 21

Subscribers

Promoters/Dealer

Question 22

The interest or right of the stockholder in the corporation’s profit or in the net assets of corporation on dissolution is shares of stock

_______ refers to the paper representation or tangible evidence of the stock itself
and of the various interests therein and expresses the contract between the corporation and the stockholder. It is not actually necessary to render a person a stockholder in a corporation because it is merely evidence of the shares of stock covered

Answer 22

Certificate of stock

Question 23

Amount equal to the aggregate par value or issued value of the outstanding capital stock

Answer 23

Legal capital

Question 24

Under the SEC Revised Guidelines, the corporate name shall contain any of the following words, except

a. Corp. c. Inc.
b. Incorporated d. Ltd

Answer 24

d.
But, can the corporation name have ltd? Yes! But you are not required.

Question 25

Who are the policy-making or governing body of a private corporation?

Answer 25

Board of Directors/Trustees

Question 26

_____refer to the basic class of ordinary shares usually without extraordinary rights and privileges, and the owners thereof are entitled to pro-rata share in the profits of the corporation and in its assets upon dissolution and likewise in the management of its affairs. This type of shares which has complete voting rights is required to be present in every stock corporation _____refer to a type of shares of stocks that is issued with some privileges in the distribution of dividends and net assets of the corporation

Answer 26

Common shares Preferred shares

Question 27

Preferred stocks must always be classified as this type of stocks while common may or may not be this type of stocks

Answer 27

Par value shares

Question 28

How may a corporation be created under Philippine setting? Either?

Answer 28

In case of private corporation, by operation of general corporation law particularly the Revised Corporation Code of the Philippines. In case of public corporation, by law or enactment of special law.

Question 29

Are the stockholders, directors or officers personally liable for the liabilities of the corporation after the assets of the corporation are exhausted?

Answer 29

No as a general rule, unless exceptional cases warrant the piercing of the veil of corporate fiction

Question 30

TorF Statement 1: The status of contracts entered into by a de facto corporation is valid and binding to protect members of the public who deal in good faith with a corporation who seems to be properly authorized Statement 2: The liability of officers and directors of a de facto corporation to creditors is only up to the extent of their subscription unless they acted in bad faith

Answer 30

Both are true

Question 31

Under the Revised Corporation Code, what is the requirement for the issuance of preferred shares?

Answer 31

Preferred shares of stock must be issued with par value

Question 32

Notes a. In case of par-value shares of stocks, the legal capital is the total par value of shares issued and subscribed b. In case of no par-value shares of stocks, the legal capital is the entire consideration received

Question 33

When no-par value common shares of stocks are issued, what is the minimum issue price?

Answer 33

P5.00

Question 34

If founder’s share classified as such in the Articles of Incorporation is given exclusive right to vote and be voted in the election of the board of directors, what is the maximum period or limit of that right?

Answer 34

5 years from the approval of SEC

Question 35

Explain Authorized capital stock

Answer 35

It refers to the amount fixed in the articles of incorporation that may be subscribed and paid by the stockholders of the corporation

Question 36

What is the life of a private corporation?

Answer 36

It has perpetual existence unless its articles of incorporation provide for a specific term

Question 37

What is the period for renewal of term of a private corporation prior its term expiration?

Answer 37

Within a 3-year period But the renewed term will start after expiration of first

Question 38

Under the Revised Corporation Code, may the corporation with a fixed term whose term has expired file an application for revival of certificate of incorporation with SEC?

Answer 38

Yes, a corporation whose term has expired may apply with SEC for the revival of its certificate of incorporation and subject to all of its duties, debts, and liabilities existing prior to its revival

Question 39

What is the implied minimum authorized capital stock of an ordinary stock corporation?

Answer 39

None. Already repealed under RCC - 11232

Question 40

T or F? Certificate of incorporation or registration refers to the document issued by the SEC to a newly formed corporation which evidenced the existence of the juridical personality of the corporation. It is also known as the primary franchise of a corporation

Answer 40

True

Question 41

Which is the primary government agency authorized to approve or reject the amendment in the articles of incorporation of a corporation?

Answer 41

Securities and Exchange Commission

Question 42

Under Revised Corporation Code, for primary registration with the Securities and Exchange Commission, the following are the documents to be submitted by the proponents for the creation of domestic stock corporation, except a. Cover Sheet for Registration b. Articles of Incorporation c. By-Laws d. Treasurer’s Affidavit showing the compliance with minimum subscription and paid-up capital including the certificate of deposit and letter of authority to examine bank deposit

Answer 42

d. Kasi kasama na yan sa Article of Incorporation

Question 43

When a change in the corporate name is approved, the SEC shall issue an amended certificate of incorporation under the amended name. What is the effect of the mere change of the corporate name approved by SEC?

Answer 43

It has no effect on the identity of the corporation, or on its property, rights or liabilities

Question 44

When does a private corporation formed under the Revised Corporation Code obtain its corporate existence or juridical personality?

Answer 44

From the date of issuance by the SEC of the certificate of incorporation under SEC’s official seal

Question 45

What is the mandatory period for a newly formed corporation to formally organize and to commence business transaction from the date of its incorporation to prevent automatic dissolution of the corporation?

Answer 45

5 years

Question 46

What is the effect if a corporation does not formally organize and commence the transaction of its business or the construction of its works within five (5) years from the date of its incorporation or issuance of certificate of registration by SEC under SEC’s official seal for causes within the corporation’s control?

Answer 46

The corporation is ipso facto dissolved by operation of law or DEEMED REVOKED

Question 47

1. Under the Revised Corporation Code, a delinquent corporation refers to a corporation that becomes continuously inoperative for a period of at least ______years after its formal organization within the period provided by law 2: Under the Revised Corporation Code, the period allowed by law to a delinquent corporation to resume its operation from the notice given by SEC in order for SEC to lift the delinquency status of such delinquent corporation is within_____ years

Answer 47

five (5) 2 years

Question 48

this defect will preclude the creation of even a de facto corporation?

Answer 48

Lack of certificate of incorporation from the SEC

Question 49

The following are ways of enforcing payment of unpaid subscription, which is the exception 1 denying delinquent stock cash dividends 2 sale at public auction of delinquent 3 denying delinquent stock the right to vote and voted upon 4 filing a court action to recover unpaid subscription

Answer 49

1 denying delinquent stock cash dividends

Question 50

Preferred stocks or preference shares are those shares of stocks with special privilege in dividend distribution or liquidation. They must be issued with stated par value. Explain: ▪ Cumulative Preferred Stocks? ▪ Noncumulative Preferred Stocks? ▪ Participating Preferred Stocks? ▪ Nonparticipating Preferred Stocks

Answer 50

▪ Cumulative Preferred Stocks entitle the owner thereof to payment not only of current dividends but also back dividends not previously paid whether or not during the past year’s dividends were declared or paid. ▪ Noncumulative Preferred Stocks grant the holders of such shares only to the payment of current dividends but not back dividends when and if dividends are paid to the extent agreed upon before any other stockholders are paid the same. ▪ Participating Preferred Stocks entitle the shareholders to participate with the common shares in excess distribution at some predetermined or at a fixed ratio as may be determined. ▪ Nonparticipating Preferred Stocks entitle the shareholder thereof to receive the stipulated preferred dividends and no more.

Question 51

Redeemable preference shares?

Answer 51

Redeemable preference shares are those shares of stocks which may be redeemed by the issuing corporation at the period stated despite the absence of unrestricted retained earnings.

Question 52

Convertible preference shares?

Answer 52

are those that are changeable by the stockholder from one class to another at a certain price and within a certain period.

Question 53

Treasury shares?

Answer 53

are those shares issued but subsequently reacquired by the corporation. They have no voting rights whatsoever and may be issued even below par value so long as the price is reasonable. They may be acquired only if there is unrestricted retained earnings in order not to violate the concept of Trust Fund Doctrine.

Question 54

Corporation As to voting ✓ Voting shares are those which have complete voting rights which are the common stocks. ✓ Nonvoting shares are those classified as such in the Articles of Incorporation and shall have limited voting rights. 1. Corporate acts when nonvoting preferred shares may still vote (I(3) AM SAD) 2. Corporate acts when nonvoting preferred shares are not allowed to vote (GRRADE)

Answer 54

1. Corporate acts when nonvoting preferred shares may still vote (I3 AM SAD) * Incurring, creating or increasing bonded indebtedness. * Investments of corporate funds in another corporation or another business purpose. * Increase or decrease of capital stock. * Amendment of Articles of Incorporation including changing the corporate term. * Merger or consolidation of corporations. * Sale or disposition or pledge or mortgage of all or substantially all of corporate property. * Adoption and amendment of by-laws. * Dissolution, rehabilitation or liquidation of the corporation. 2. Corporate acts when nonvoting preferred shares are not allowed to vote (GRRADE) * Granting of compensation of directors. * Removal of directors. * Ratification of disloyalty of directors or voidable contract involving self-dealing director or interlocking director. * Approval of management contract. * Distribution of stock dividends. * Election of directors.

Question 55

PLEASE REMEMBER: Sa halos lahat ng Corporation Powers, need and Majority Vote ng BODs. Majority of the Quorum. Then depende nalang if need pa ng 2/3 of outstanding capital stock

Answer 55

Please review your magic table here