LAW ON BUSINESS ORGANIZATIONS

Incorporation And Organization Of Private Cororations

 What is the number and qualifications of incorporators?
 May a single individual form a corporation? Distinguish one person corporation
from corporation sole.
 May incorporators be changed after incorporators?
 May a corporation be formed to practice a profession?
 When may a corporation apply for revival of its corporation existence?
 What is the minimum capital stock, subscribed and paid-up of a stock corporation?
 What is the form of the articles of incorporation and place thereof?
 Contents of Articles of Incorporation.
 Grandfather rule in determining the nationality of a corporation;
 Corporations totally or partially reserved to Filipinos under the Constitution.
 How may Articles of Incorporation be amended?
 Corporation by estoppel.

Board Of Directors/Trustees/Officers (BOD/T/O)

 Who may exercise the corporate powers of all corporation?
 Instances when corporate powers are granted by the Corporation Code to the
stockholders/ members (SH/M);
 May directors/ truestees attend board meetings by proxy?
 May SH/ M sell the property of the corporation?
 Where may corporate officer derive his authority or powers?
 Doctrine of Apparent Authority;
 Term of office of a director; Hold-Over Principle;
 Qualifications of BOD/T;
 What time must a person be a SH or qualify as a director?
 Must directors of a corporation be citizens of the Philippines and must he also be
a natural person?
 Quorum at election of directors and trustees;
 Removal of BOD/T/O;
 Compensation of BOD;

Powers Of A Corporation
 What are the corporate powers and capacity?
 How may corporation extend or shorten its term?
 Extension of term after amendment of AOI;
 Pre-emptive Right;
 May a corporation acquire its own share?
 Dividends
 Powers of corporation possess and exercise?
 Ultra vires Act
BY- LAWS
 How and when may the code of by-laws of the corporation be adopted?
 When will by-laws be effective?
 What are the requisites of by-laws?
 Are by-laws binding to third persons?

MEETINGS
 What are the kinds of meetings of the BOD/T, SH/M
 Who may call the meeting of the stock holders or members?
 May notice of meeting be waived?
 Place and time of Meetings
 How may right to vote of SH/M be exercised?
 When is vote of the majority of ALL BOD/ M required?
 Teleconferencing meeting;
 Proxy

Stock And Stockholders

 Rights of SH
 Subscription Contract
 Consideration for issuance of stock
 Stock Certificate
 How may shares of stock be transferred

One Person Corporation

What is a "One Person Corporation"
A. "One Person Corporation" is a corporation with a single stockholder who is a
natural person, trust, or an estate. the enactment of the Revised Corporation Code,
Prior to any number of natural persons not less than five (5) but not more than
fifteen (15) may form a corporation. This was amended so as to allow a single
stockholder who is a natural person, trust or estate to form a "One Person
Corporation.'

Distinguish a "One Person Corporation" from (a) Sole proprietorship, and (b)
Corporation Sole.
A. (a) A "One Person Corporation" is an artificial being which has a personality
separate and distinct from its stockholder'05 unlike a single proprietorship which
does not have a personality separate and distinct from the owner;
(b) individual Under the Revised Corporation Code, a single may form a "one
person corporation" for any business or legitimate purpose. It is different from a
corporation sole which can be formed by the chief archbishop, bishop, priest,
minister, rabbi, or other presiding elder or a religious denomination, sect or church
for the purpose of managing as trustee the affairs, property temporalities of any
religious denomination, sect of and church.
Who may or may not form a "One Person Corporation"?
 A. "One Person Corporation" person, trust or an may be formed by any natural
estate. However, the following may not incorporate as a "One Person Corporation":
(1) Banks and quasi-banks, pre-need, trust, insurance, and publicly-listed
companies; public (2) Non-chartered corporations; government-owned and -
controlled (3) A natural person who is licensed to exercise a profession for the
purpose of exercising such profession except as otherwise provided under special
laws.

What is the minimum capital of a "One Person Corporation"?

A. Like any stock corporation which is not required to have a minimum capital
stock, except as otherwise specifically provided by special law, a "One Person
Corporation" shall not likewise be required to have a minimum authorized capital
stock except as otherwise provided by special law.

Who are the officers of the OPC?

A. Like an ordinary corporation, a One Person Corporation or OPC must have the
following officers: President, Treasurer, Secretary and other officers. The single
stockholder shall be the sole director and of the One Person Corporation. president
Within fifteen (15) days from the issuance of its certificate of incorporation, the One
Person Corporation shall appoint a treasurer, corporate secretary, and other
officers as it may deem necessary, and notify the Commission thereof within five
(5) days 1066 from appointment.

Consolidation/ Merger/ Dissolution

What are consolidation and merger?

A. Consolidation is the union of two or more existing entities to form a new entity
called the consolidated corporation. A merger, on the other hand, is a union
whereby one or more existing corporations are absorbed by another corporation
that survives and continues the combined business.

Distinguish merger from consolidation.

A. In both merger and consolidation, two or more corporations are involved and
merged or consolidated into one corporation. Their distinctions are as follows:
1. In merger, all of the constituent corporations involved in the merger are
dissolved except one, while in consolidation, all consolidated corporations are
dissolved without exception;
2. In merger, no new corporation is created while in consolidation, a single new
corporation emerges;
3. In merger, the surviving corporation acquires all the assets, liabilities and capital
stock of all constituent corporations, while in consolidation, all assets, liabilities and
capital stock of all consolidated corporations are transferred to the new
corporation.

What are the effects of merger and consolidation?

1. The constituent corporations shall become in case single corporation which, of
merger shall be the surviving corporation and, in the we of consolidation, shall be
the consolidated case corporation;
2. The separate existence of the except constituent corporations shall cease, that
of the surviving or consolidated corporation;
3. The surviving or consolidated corporation shall possess rights, privileges,
immunities and powers and a corporation subject to all the duties and liabilities of
a corporation organized under this Code;
4. The surviving or consolidated corporation shall and thereafter thereupon
franchises possess all the rights, privileges, immunities and of each of the
constituent corporations;
5. All property, real or personal, and all receivables due including subscription to
shares, and all and every other interest of, or belonging to, or due to each
constituent corporation, shall be taken and deemed to be transferred to and vested
in such surviving or consolidated corporation without further act or deed;
6. The surviving or consolidated corporation shall be responsible and liable for all
the liabilities and obligations of each of the constituent corporations;
7. Any claim, action or proceeding pending by or against any of the constituent
corporations may be prosecuted by or against the surviving or consolidated
corporations; and
8. Neither the rights of creditors or any lien upon the property of any of each
constituent corporation shall be impaired by such merger or consolidation.

What is the right of the stockholder who dissented to the merger or

consolidation?
A. Any dissenting stockholder in stock corporations may exercise his appraisal
right under Section 80 provided that if after the approval by the stockholders of
such plan, the board of directors decides to abandon the plan, the appraisal right
shall be extinguished.

When will the merger or consolidation take effect?

A. When the Securities and Exchange Commission is satisfied that the merger or
consolidation is not inconsistent with law, it shall issue a certificate of merger or
consolidation, at which time the merger or consolidation shall be effective. Thus,
consolidation becomes effective not upon mere agreement of the members but
only upon issuance of the certificate of consolidation by the Securities and
Exchange Commission because merger or consolidation involves fundamental
changes in the corporation, as well as in the rights of the stockholders and
creditors.

What are the effects of dissolution of a corporation?

A. The following are the effects and dissolution of a corporation:
1. It shall be continued as a body corporate for three (3) years after dissolution, for
the purpose of liquidation but not for the purpose of continuing the business for
which it was established;
2. At any time during said three (3) years, the corporation is authorized and
empowered to convey all of its property to trustees for the benefit of stockholders,
members, creditors, and other persons in interest;
3. After conveyance of corporate property as stated above, all interests the
corporation had in the said property terminates, and legal title shall vest in the
transferee;
4. Upon winding up of the corporate affairs, any asset distributable to any creditor
or stockholder or member who is unknown or cannot be found shall be escheated
In favor of the national government;
5. Distribution of its assets or property shall be done only 1099 after payment of all
its debts and liabilities.

What are the methods of liquidation of a dissolved corporation?

A. The methods of liquidation of dissolved corporations are:
1. Liquidation by duly appointed receiver;
2. Liquidation by the corporation itself or its board of directors;
3. Liquidation by trustees to whom the assets of the corporation had been
conveyed.

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