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CORPORATE POWERS AND AUTHORITY Ff are express powers that requires stockholders ratification

-Corp has no power except those expressly, impliedly or 1. Borrow Funds- requires SPA
incidental to its existence
2. Extend/ shorten corporate term
-Exercise its power thru Board of Directors or duly authorized
3. Enter into management contracts
officer
4. Enter into joint venture

5. Increase/ decrease capital stock -also needs approval of SEC

Express powers
6. Incur, create or increase bonded indebtedness
1. Adopt and use corp seal
7. Invest corporate funds for non-primary purpose
2. Amend articles of incorporation
8. Sell, dispose, mortgage, encumber all substantial asset
3. Amend/ adopt by-laws
-Corp property is not property of stockholders, may not be sold
- within 1 mn from receipt of incorporation or before
without express authority from BoD
incorporation
-Sale by BoD requires ratification of 2/3 votes otherwise void
4. Deny pre-emptive rights
9. Sell land and other properties
5. Issue/ sell stocks
10. Sue and be sued- lodged with BoD
6. Increase/ Decrease of capital stock
11. Hire Employees and appoint agents
-Approval by majority vote of board, 2/3 vote ratification of
stockholder, prior written notice to each stockholder, 12. Provide gratuity pay
certificate must be signed by majority of stockholders, filed and
approval of SEC 13. Make reasonable donations

-Increase of capital stock must not prejudice the right of

creditors
Ultra Vires Doctrine
7. Enter into merger or consolidation
-Committed outside beyond the power of corporation
8. Extend/ shorten corporate term
-Act done in excess of corporate officers authority (cannot bind
-majority vote of board, ratification by 2/3 votes of corp)
stockholders, made during the lifetime of corp

-Dissenting stockholder may exercise appraisal right

Ratification of Ultra Vires Act
-Submit and approval of SEC
-Corp is estopped from questioning the legality of such act
9. Succession

-Corp exist despite of death, civil interdiction, incapacity

Consequence of Ultra-vires act
10. Sue and be sued
-Suspend/ revoke
- Principal office of business indicated in AOI
-Derivative suit filed by stockholder
11. Make reasonable donation- not be aid for politics

By-laws
Implied Powers
-Not contrary to law, public policy, morals
-Articles expressly provide that the purpose was to engage in
-Not inconsistent with AOI
transportation by water, such corp cannot engage in land
transportation- entirely different business -Reasonable
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Failure to file by-laws

-Suspension/ revocation of franchise after notice and hearing It is the BoD and not the President that exercise corporate
powers
-Does not result in automatic dissolution

Action of BoD during meeting which was illegal for lack of

By-laws are internal rules and does not bind 3rd person whom
notice may be ratified either expressly by the action of the directors
does not have any knowledge
in subsequent legal meeting or impliedly by the corp subsequent
course of conduct

Modes of Amending By-Laws

A. Majority vote of Directors and majority vote of outstanding Theory of Stockholders delegated power
capital stock
-BoD is a creation of stockholders and direct affairs of the corp
B. BoD alone when delegated by 2/3 votes of outstanding
-Right to vote for the Directors
capital stock (may be revoked)

Executive Committee
Stockholders meeting; req
-Board has the power to constitute it even if not provided in
1. Held on date fixed by by-laws
AOI and by-laws
2. Prior notice (In writing but waivable express/ implied)

3. Proper place- where principal office is. Except nonstock corp

Business Judgment Rule
which may be anywhere in Ph
-Questions of policy or management are left solely to the
4. Quorum
honest decision of BoD, courts have no authority to review
them, whether it will cause losses or decrease corporations
profit
Director/Trustees Meeting;Req
-No court can in resolving issues between squabbling
1. Held monthly, anywhere in Ph unless by-law provides stockholders, order the corporation to undertake certain
otherwise corporate acts
2. Notice sent at least 1 day prior(waivable) - if not complied
with, meeting is illegal and will not bind the corporation but
presence in the meeting waives the want of notice However, directors shall be liable if mismanagement resulting
to losses be proven resulting from BF
3. Teleconferencing and vidoeconferencing is allowed

4. Proxy not allowed

DOCTRINES TO PROTECT CORPORATE CONTRACTS

A. Doctrine of Ratification
Board of Directors
-BoD to ratify have full and complete knowledge of all material
-Exercise powers granted by law, conduct business, controls facts connected withe the transaction. Ratification can never
and hold property of corp be made by same person who wrongfully assume power
-Board is separate and distinct from corporate entity

-Fiduciary character Admission by counsel on behalf of the corporation of thev

latters culpability for personal loans obtained by its corporate
-Must as a body to bind the corporation
officers cannot be given legal effect when the admission was
-May delegate its authority without any enabling act or attendant ratification of corporate act

-Power to appoint/terminate corporate officers

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B. Doctrine of Apparent Authority Quorum

-Corporation knowingly permits one of its officers to act within A. Stock Corp- based on number of outstanding voting stock
the scope of apparent authority, it holds him out to the pubic
B. Nonstock- actual living members with voting rights
power to do acts and corp is estopped from denying such
authority

Abstentation
Note: Corporation should first prove by clear evidence that its -Presumed to be counted as affirmative
corporate officer is not in fact authorizes on its behalf before the
burden of evidence shifts to the other party to prove
Minutes of Meeting

QUALIFICATIONS OF DIRECTORS/TRUSTEES -Signature of corporate secretary gives probative value and

credibility
-Director must own atleast 1 share of stock

-Director cannot be represented by proxy

Resolution

-Formal action by corporate BoD authorizing a particular act,

Election of Directors/Trustee transaction
-Board elected annually

-Submit formal report to SEC on the changes in directors and Minutes

officers. Only those directors/ officers appearing in such report
are deemed legally constituted to bind the corporation -Brief statement that transpired at a meeting

Election Contest Compensation of Directors

-Quo Warranto Proceeding -GR: Gratuitous Service. Not entitled for compensation when
they perform in their usual and ordinary duties.
-Original and exclusively jurisdiction of RTC acting as Special
Commercial Court and not SEC EX: Can receive renumeration for acting as executive officers
like Chairman, Pres, Corp Secretary

Removal of Director/ Trustee

Corporate Officers
-Only by stockholders on stockholders meeting called by
atleast 2/3 outstanding capital stocks 1. President- shall be a director

2. Secretary

Hold-Over Principle - custodian of corporate records. Duty and obligation to

register a valid transfer stock in the books
-Directors to fill vacancy occuring in the Board until
qualification of their successors -Secretary Certificate is regular on its face and can be relied
upon by 3rd person
-Hold-over is not part of the term of office of a member of BoD
-A pledgor prior to foreclosure and sale does not acquire
ownership rigts over the pledged shares and cannot compel
the corp secretary to record his alleged ownership of such
Remaining members of Board cannot elect another director to
shares on the basis of merely contract of pledge
fill vacancy caused by the resignation of a hold-over director,
vacancy can only be filled up by the stockholders

3. Treasurer

-Whose negligence in signing a confirmation letter for
rediscounting of crossed checks knowing fully well that checks
were strictly endorsed for deposit only can be personally liable
VP does not require to be a stockholder. But when By-laws
provide that VP and Secretary must have the same qualification as
those of the president, appointment of whom not members to such
position would be unlawful
Corporate polices need not be in writing
Acts of corporate officers within the scope of their authority
are binding on the corporation. If exceeded their authority, does not
bind the corporation
President of the corporation which becomes liable for the
accident caused by its truck driver cannot be held solidarill liable for
the judgment obligation arising from quas-delict since being the
president
President is a corp officer, issues of dismissal of him is
intra-corporate dispute
One who is included in the by-laws is a corporate officer and
not mere employee
A mere manager not named in the by-laws is not an officer of
the corporation
FIDUCIARY DUTY OF DIRECTORS AND OFFICERS; 3 fold duty
1. Obedience
-Director shall act in a manner and within formalities
prescribed by its charter or general law
2. Loyalty
-Directors shall not use their position to further their personal
interest
3. Diligence
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-Director shall be personally liable to reimburse corporation
(accounting) for the amnts of dividends wrongfully declared
and paid to stockholder
Shall not acquire personal or pecuniary interest in conflict with
their duty as such directors/ trustees
Liabilities of director, trustees, officer
-GR: not liable for corporate debts. Being separate and distinct
-Mere ownership by an officer of majority of the equity of the
corporation do not warrant piercing the veil to make such
officer personally liable for debts
Ex: to make director personally liable for debts of corporation; Req
1. Complaint allege director/officer assented to unlawful acts
of corp/ gross negligence or bf of directors or officers (severally
liable)
2. Clearly and convincingly prove such unlawful acts,
negligence or bf
BF does not arise for failure of the corporation to pay its
obligation.
Officer-stockholder who signs in behalf of the corporation to a
fraudulent contract cannot claim the benefit of separate juridical
entity
Officers of a corporation may become liable for its loans when
they breached their duty of diligence
Corporate officers are not personally liable for money claims of
discharged employees unless they acted with evident malice and bf
in terminating their employment (solidary liable)
Rule: Corporation obtain funds for capital expenditures by: Shares
of stocks or bonds
SHARE OF STOCKS
-Personal property of stockholder, owners have right to
transfer
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-Registration of shares in stockholders name, issuance of stock -Stocks issued and fully paid for and re-acquired by corporation
certificate, right to receive dividends, registration in the book either by purchase, donation, forfeiture, do not have the status
of being outstanding shares, and not entitled to be voted upon

Capital Stock (Paid up Capital)

6. Re-classification and exchange shares
-Not all funds/ assets received by corporation can be
considered paid-ip capital; such must form part of Authorized -Reclassification of shares does not always bring any
Capital Stock- been subscribed and actually paid up substantial alteration in subscribers proportional interest

-Excludes treasury shares -Exchange- Shifting of the balance of stock

Subscribed Capital Conversion of preferred shares through amendment of AOI is

legitimate exercise of corporate powers
-Agreed to take and pay. Can be more than par value of the
shares

Reduction of Capital stock cannot be employed to avoid

corporations’s obligation
Classifications of Shares

1. Common Shares
Assignment of Subscription Agreement
-Represent the residual ownership interest of corporation
-Form of novation by substitute of a new debtor which requires
-Issued without extraordinary rights and privileges, entitles
the consent of the creditor
shareholders pro rata division

-Cannot be deprive of right to vote

When properties were assigned pursuant to pre-incorporation
subscription agreement, but the corporation fails to issue the coverd
2. Preferred Shares shares, return of such properties to the subscriber is a direct
consequence of rescission and does not amnt to corporate
-Entitles shareholder some priority on dividends and asset distribution of assets prior to dissolution
distribution

-Still entitles to voting rights in the absence of denial in AOI h

Consideration for Subscription

1. Cash
3. Redeemable Shares
2. Property
-Certificate of stock recognize redemption but the option is
vested with the corporation. 3. Services

-”Optional” 4. Shares

-Repurchase of stock by issuing corp in exchange for money, 5. Retained Earnings

property

Sec43: Prohibits the issuance of any stock dividend without the

4. Founders Shares approval of stockholders, representing not less than 2/3

-When articles of incorporation expressly provides a class of

share to have exclusive right to vote and voted for into BoD
Trust Fund Doctrine re: Unpaid subscription

-Subscription to the capital of corporation constitute a fund to

5. Treasury Shares which creditors have a right to satisfy their claims

-Board resolution releasing the stockholders from payment of
balance of their subscription is ineffectual
A stockholder who is employed with the company, cannot
offset his unpaid subscription agsnt his claims for wages, where
there has been no call for the payment of such subscription
Certificate of Stock
-Not the stock itself merely e vidence of ownership of shares of
stock. Convenient instrument for the transfer of title
-No certificate shall be issued until full amnt has been paid
-Not a negotiable instrument but merely quasi negotiable bcus
maybe transferred thru delivery coupled with endorsement
-Endorsement of Certificate of stock is mandatory requirement
for effective transfer of certificate of stock
-Could not be considered issued in contemplation of the law
unless signed by P/VP and countersigned by Secretary
Street Certificate
-Stock certificate endorsed in blank by owner
Stock and Transfer Book
-Not a public record
-Entries can only be done by Corp secretary, other entries not
made by him shall not be given effect
Absence of deed of sale evidencing sale of shares of stock does
not necessarily show irregularity since sec63 does not require any
deed for the validity of the transfer of shares
Registering lis pendens is inapplicable to shares of stocks which
are personal
Situs of shares of stock is the domicile of corporation
Req for Issuance of Certificate of Stock
1. Signed by president/vp and countersigned by secretary
2. Sealed by corp seal
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3. Full amnt of subscription be paid
-Issuance of Stock certificate is not a condition sine-quanon to
consider a subscriber as a stockholder
Req: for issuance of new certificate of stocks in lieu of those lost,
stolen or destroyed
1. Reg owner file with corp an affidavit setting forth the
circumstances
2. Submit evidence
3. Publication of notice
-If there is contest- issuance of new cert of stock shall be
suspended until final decision of court
GR:Holders of subscribed shared not fully paid are entitled to all
rights of a stockholder
EX: Delinquent stockholder/ Stockholder exercise his appraisal
right
Nonregistration od certificate of stock to corp books
-Will not affect the validity in so far between contracting
parties but not effective to the corporation bcus the corp looks
thru its books for the purposes of determining who are the
stockholders
Necessity of registration of transfers stock
1. Avoid fraudulent transfer
2. Afford corp to object/ refuse registration
3. Enable corp to know who are stockholders
4. Exercise his rights as stockholder
5. Protect creditor
3 Ways to become stockholder
1. Contract of subscription- take and pay stocks of a corp. Not
required to be in writing. Fraud does not apply. Conditional
subscription is valid
2. Purchase of shares of existing stockholder
3. Purchase of treasury shares from corp
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B. Corporation and subscriber- subscription is void, pay full

value
Valid transfer stocks
C. Consenting stockholder- estopped from raising any
1. Delivery- not essential if sought to be held as stockholder is
objection
officer of a corporation
D. Dissenting stockholder- they may compel the payment
2. Certificate must be endorse by owner/ atty-in fact
solidarily agnst the responsible and consenting directors
3. Recorder in books to be valid agnst 3rd parties
E. Creditors- Enforce payment

Only absolute conveyance of ownership of the title to a share

When unpaid subscription= interest shall be paid
need be entered and note dupon the books of the corporation.
Chattel mortgage is not a complete and absolute alienation, its entry 1. On the date fixed in the contract of subscription
and notation upon the books is not necessary requisite and
2. Specified by BoD
mandamus will not lie

Remedies of the corporation to enforce payment of unpaid

A clause contained in the by-laws of a corporation which
subscription
provides that the owner of a share of stock cannot sell it to another
person except to the corporation is ultra vires. Violative of property 1. Delinquency sale by board action
rights of shareholders
2. Collection case in court
Unauthorized Issuance of certificate of stock
-Failure/ refusal of corp to enforce/ collect payment of unpaid
-Either by fraud/ mistake subscription will not prevent creditors or receiver of corp to
institute a court action to collect unpaid portion
-GR: no legal title and no right of remedy agnst the corporation

-Ex: If corporation issues a new certificate of stock to a bona

fide purchaser, corp is estopped to deny its validity, can Grounds for questioning delinquency sale
compel the corporation to recognize his title
1. Irregularity in notice of sale

2. “ in sale
Watered stock

-issued by corp as fully paid up shares when in fact whole amnt

of value is not paid
-Directors and officers are solidarily liable with stockholders
concerned and its creditors for the difference between fmv at
the time of issuance and par value
Conditions before an action to recover delinquent stocks
irregularly sold may be allowed
1. Party seeking pay first to the party holding the stock sum
same as sold

2. File a complaint within 6 mns from date of sale

Ways which watered stocks may be issued

1. Monetary is less that its par value Call

2. Property valued in excess of its fmv -Condition precedent before the right of action to institute a
recovery suit accrues
3. Gratuitously
-Demand is required before debtor may incure delay
4. In the guise of stock dividends, no surplus profit
-Unpaid subscription is not due and payable until call us made
by corporation for payment
Effect of watered stocks

A. As to corp- state may institute quo warranto Call is not necessary in the ff
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1. Contract of subscription provides for date of payment 2. Answer to creditors for unpaid subscription

2. Corp become insolvent 3. Liable as general partners if ostensible corp

GR: Valid and binding subscription of stock cannot be canceled so 4. Liable for corp torts if participated
as to release the subscriber from liability
5. Pay interest on unpaid subscription
Ex: Consent of all stockholders are given

Ex to ex: Bona fide compromise, set-off of debt due from corp,

Corporate books
release supported by consideration
-Subject to inspection(to protect his right as stockholder) at
reasonable hrs on business days- must act in gf
Stockholder is personally liable for the financial obligation of a
Inspection of books in personal but may be delegated
corporation to the extent of his unpaid subscription

One requesting must not be guilty of using it improperly the

Delinquent stock is not entitled to
info and must act in gf
1. Voted

2. Represented at stockholder smeeting

GR:Any officers who refuses to allow inspection shall be liable for
3. Any of the rights of stockholders damages

-Except it is entitled to dividends EX: Defense of 1) Improperly use of information 2) not acting in GF

Rule: holders of not fully paid of subscribed shares but not

delinquent shall have all the rights of stockholders

Ex: not entitled to be issued a certificate of stock

Remedies of stockholder who is denied inspection

1. Crim complain
Rights of stockholders
2. Damages
1. Appraisal rights
3. Mandamus
2. Exercise preemptive rights

3. Issued certificate of stocks

Merger
4. Inspect books
-Absorbing one or more existing corp by another, the other is
5. Have corporation dissolve dissolved (A+B=A)

6. Receive dividends

7. Right of first refusal Consolidation

8. Right to file derivative suit -Uniting existing corp to form a new corp (A+B=C)

9. Transfer shares of stocks

10. Participate in distribution of assets of corp upon dissolution Effect of Merger/ Consolidation

-One of the corporation survives and continue the business,

while the other is dissolved and all their rights and properties
Obligations and liabilities of Stockholder
and liabilities are acquired by surviving corporation
1. Answer the water in stocks
-Surviving corporation has the right to institute collection suit
on accounts of the constituent corporation

3 Types of corporate acquisition and transfer
1. Assets only
- Transferee not liable for liabilities of the transferor except
agreed upon expressly or impliedly
2. Transfer of business enterprise
-Transferee continues the business enterprise of transferor.
Transferee shall be liable for the liabilities of transferor arising
from business enterprise
3. Equity Transfer
-Transferee is not liable for debts and liabilities of the
transferor except transferee expressly/ impliedly agreed to
assume debts
-Where change of ownership is done in BF or used to defeat
rights of labor, successor-employer is deemed to have
absorbed the employees and held liable for transgression (if GF
then no legal duty to absorb)
In merger/ consolidation there is no liquidation of assets of
dissolved corporation and the surviving/ consolidated corporation
assume ipso jure the liabilities of dissolve corp.
Consent of creditors of corporation is not needed in M/C
No law requiring that the purchaser should absorb the
employees of the selling company.
Unless expressly assumed, employment contracts and CBAs are
not enforceable agnst transferee of an enterprise, labor contracts
being contracts in personam and binding only between parties
Req:Merger and Consolidation
1. BoD/T of each corp shall approve a plan of m/c
2. Approval of plan by stockholder by 2/3 votes of each corp
3. Prior 2 weeks notice of meeting with a copy of summary
plan
4. Execution of articles of m/c by each corp
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5. Submission to SEC
6. Issuance of certificate of m/c by SEC
Amendment of plan of M/C
-Must be approved by majority vote of the respective BoD/T of
all corp
Merger/ comsolidation does not become effective upon mere
agreement, only upon issuance of certificate of merger by SEC
Appraisal Right
-Method of paying a shareholder for taking his property
-Where a stockholder can avoid the conversion of his property
to another property not of his own choosing
-To protect property rights of dissenting stockholder from
action of majority stockholder which alter the nature of their
investment
Instances when a stockholder have the right to exercise appraisal
right
1. Amendment of AOI effect of
a) Authorizing preferences
b) Changing/ restricting rights of stockholder
c) Extending/ shortening corporate existence
2. Sale, lease, exchange, transfer, mortgage or pledge of all or
substantial all corporate property
3. Merger/ consolidation
Req: For exercise of Appraisal Right
1. Stockholder voted agnst the propose corporate action
2. Written demand for payment within 30 days after vote was
taken(failure to do so, waiver)
3. Surrender of certificate of stock for notation in corporate
books and payment of said share base on fmv of the day prior
to the date of vote
4. Upon payment of share, deisenting stockholder shall
transfer his share to the corporation
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If stockholder is not immediately paid the value of his share

within 30 days, his voting and dividend right shall immediately
3 modes of dissolution
restored
1. Expiration of term

2. Voluntary dissolution
No demand for payment may be withdrawn unless the
corporation consented 3. Revocation of franchise

Right to payment cease when: Stockholder/ member of corporation can institute dissolution
proceeding agnst own corporation
1. Corporate action is abandoned/rescinded

2. “ disapproved by SEC
SEC has concurrent jurisdiction to suspend, revoke, after
3. Stockholder withdraw his demand for payment with corps proper notice and hearing the franchise/ certificate of registration of
consent corporation

4. SEC determines that stockholder is not entitled to appraisal

right Effect of dissolution
5. Stockholder fails to submit certificate of stock within 10 days 1. Terminates corp franchise and prevents further exercise of
from demand of payment secondary franchise if any
6. Shares are transferred and canceled 2. Terminates power to enter into contract

3. Contracts for personal service are terminated

GR: Cost and expenses of appraisal shall be borne by corporation 4. Debts due to corp are not extinguished

EX: fair value ascertained by appraiser is the same as price the corp 5. GR: Lease to a corporation, rights and obligation therein is
is offering to stockholder not extinguished by dissolution. Stockholders succeed to rights
and liabilities in unexpired leasehold

EX: Lease terms also terminates it when corp ceases

GR: In action to recover the fair value of stocks, all cost and
expenses shall be assessed agnst the corporation
Liquidation and winding up
EX: Refusal of stockholder to receive payment is unjustified
-Collection of corporate assets

-Payments of debts, settlement if obligation

Dissenting stockholder is not prohibited from selling,
transferring or assigning his shares -Distribution of corporate assets in accordance to
stockholders proportionate share

-Dissolved corporation continues as a body corporate for 3 yrs

A director who exercise his appraisal right remained to be a from time of dissolution for purposes of prosecuting and
director until his share no longer registered in his name defending suit, convey and distribute assets

Stockholder whose subscription not fully pais is still entitled to Assets distributable to creditor/ stockholder who is unknown
exercise his appraisal right or cannot be found shall be escheated to city/ municipality where
assets is located

DISSOLUTION
GR: No corp shall distribute any of its assets except upo dissolution
-Extinguishment of corporate franchise and termination of and after payment of debts
existence
EX: Decrease of capital stock or otherwise allowed by Code
-Can no longer pursue business except winding up its affairs

Counsel who prosecuted and defended the interest of the
corporation and who appeared in behalf of the corporation may be
considered as a trustee
Claim established agnst the corporation may be prosecuted
agsnt the liquidator even after 3 yrs from dissolution
Upon dissolution of the corporation, its assets are held for the
benefit of its stockholder after payment of debts
GR: BoD of a dissolved corporation is not permitted to undertake
any activity outside the usual liquidation of the corporation
EX: Stockholders of a dissolved corp may convey their respective
shareholdings towards the creation of new corporation to continue
the business of the old
Incorporation test is applied in determining whether
corporation is domestic or foreign. Except: In times of war, Control
test applies
If corporation is incorporated in another state, it is a foreign
corporation, while if it is registered in Ph laws, deemed as Filipino
domestic corporation irrespective of the nationality of the
stockholders
GR: Corporation can have no legal existence outside the
boundaries of the sovereign by which it is created
EX: Principle of comity
Derivative Suit
-Action brought by minority stockholders in the name of corporation
to redress wrongs committed agnst the corporation for which the
directors refuse to sue
-This is agnst the abuse of majority stockholders
Family corporation is not exempt from complying the
requirements to file derivative suit
Req: of Derivative Suit
1. Must be a shareholder during the time the act/ transaction
complained (number of shares is immaterial)
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2. Exhausted intra-corporate remedies
3. Cause of action actually devolves on the corporation and not to
the particular stockholder bringing the suit
ONE-MAN CORPORATION (OPC)
-Corporation with a single stockholder
-Separate and distinct legal personality still applies
-Limited liability
-Only natural person, estate and trust may form opc
-Not required to have a minimum capital stock
-Not required to file by-law bcus these are rules and regulations that
govern intracorporate relations. Since there is only 1 stockholder, no
need
-Shall distinguish itself as ‘OPC’
Corporate officers of OPC
1. President- sole director
2. Corporate Secretary- citizen and resident of Ph
3. Treasure- must be resident of Ph
4. Other officers
-Within 15 days from issuance of certificate of incorporation,
appoint such officers
Nominee and Alternate Nominee
-Designated by single stockholder in the event of his death,
incapacity, to take place as director and manager
-There must be written consent of nominee and a.n attached to AOI
-Contain the name, residence, address and contact details of
nominee and a.n stated in AOI
-Their consent maybe withdrawn in writing at anytime prior to
stockholder death/ incapacity
How long nominee/a.n act
A. Temporary incapacity
-Until stockholder regain his capacity
B. Death/ Permanent Incapacity
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-Until the heirs of stockholder, designate one of them or agreed that

the estate shall be the stockholder
Stay order

-Stop collection and let corporation recover first

Delinquent Status of OPC

-If failed to submit with SEC reportial requirement for 3 instances

whether consecutively or intermittent within the period of 5 yrs Submit a rehabilitation Plan

-Containing when to pay and who to pay first

Nominee can be change by stockholder by submitting to SEC.
No need to amend AOI
Dividends from retained earnings can be declared to
stockholders and cannot to the creditors
Natural person who is license to exercise a profession may not
organize OPC except otherwise provided by special laws
(Architecture and Environmental Planning Act) Corp alraedy dissolved cannot anymore issue Board resolution

AOI shall substantially contain name of corporation, nationality,

residence of nominee and alternate nominee

In OPC, single stockholder cannot appoint itself as corporate

secretary bcus of the sensitivity of the matters handled by secretary
but he can be a treasurer provided that the corporation gives a
bond- renewed every 2 yrs

OPC no need for meeting. Sufficient to prepare a written

resolution, recorded in the books except meeting with officers if
wanted to

Limited liability of OPC but if cannot prove that OPC is

independent of the stockholder personal property, stockholder shall
be jointly and severally liable for debts-piercing the veil of corporate
fiction

Ordinary corporation can be converted to OPC when

stockholder acquires all the stock. Apply to SEC conversion. If SEC
approved, commissioner shall issue a certificate of filing amended
AOI to reflect conversion

Liabilities of ordinary stock converted to OPC- OPC acquires it

FRIA

-Allows corp to apply for rehabilitation even before its uffers losses
in order to recover financially