SELF CHECK FN-2.1.

1 “Corporation”

STUDENT NAME: Jonaysa Aragasi SECTION: BA2MA

Answer the following question and explain.

1. What are the Steps in the creation of a corporation?

1. Promotion
2. Incorporation
3. Organization and commencement of business operation

2. What are the Steps in incorporation?

1. Drafting and execution of the Articles of Incorporation

2. Filing of Articles of Incorporation

3. Payment of the filing of Articles of Incorporation

4. Issuance by the SEC of the Certificate of Incorporation

3. Can a corporation validity change its corporate name under its general power to amend its
Articles of Incorporation?

Yes, the power to amend the charter includes the power to alter the name of the corporation.

4. Does a change in the name of a corporation result in the dissolution?

No, the change in name is not a ground of dissolution. The corporation continues, only it has a
different name.

5. Limitation on the use of the corporate name

1. No person, association or corporation not conducting banking operation shall use in connection
with its business the word or words “bank”, “banking”, or “banker”, or word of similar import.

2. No person, association or corporation doing business in banking but not authorized under the
Rural Bank Law shall use the word “Rural Bank”.

3. Prohibiting in the u person, of the word “national”, for those business banking.

4. Using directly or indirectly, of the emblem, official seal and name of the United Nations for
business purposes.

5. Prohibition in using the term “Development Bank” for person or corporation not organized
under the Development Bank Act.
WRITTEN TASK FN-2.1.1 “Corporation”

STUDENT NAME: ______________________________ SECTION: _____________

Question:

Answer the following question and explain.

1. What are the Limitation of the “purpose” clause of the Articles of Incorporation?

1. The purpose or purposes must be lawful.

2. The primary purpose must be stated.

3. The purpose must be capable of being lawfully combined.

2. Can a corporation be formed for more than one purpose?

Yes, but this is subject to the limitation that the purposes can be lawfully combined.

3. For how long can a corporation exist?

As stated in the Articles of Incorporation, for a period not exceeding Fifty(5) years. It can be
extended to another number of years provided that at any one instance the extension does not
exceed for more than Fifty (50) years. No extension can be made earlier than Five(5) years prior
to the original or subsequent expiry date(s) unless there are justifiable reasons for an earlier
extension as may be determined by the SEC. (Sec 11)

4. What is the minimum capital stock required from stock corporation?

At least 25% of the authorized capital stock must be subscribed and at least 25% of the total
subscription must be paid upon subscription, the balance to be paid on a date or dates fixed in
the contract of subscription without the need of a call, or in the absence of a fixed date or dates,
upon call for payment by the Board of Directors. In no case shall be paid-up capital be less than
Five Thousand (P5,000) Pesos. (Sec 13)

Note:

There is no minimum requirement of the authorized capital stock. As long as the paid-up capital
is not less than P5,000, any stock corporation may incorporate.
PERFORMANCE TASK

Illustrative Case:

The Board of Directors of SMC, engaged in the manufacture and sale of food products, with the
approval of the stockholders amended the by-laws of SMC, disqualifying any stockholders, who is also a
stockholder and director of a competitor corporation, from being elected as director. G, a stockholder
holding sufficient shares to assure him a seat in the Board, filled a petition with the SEC for declaration
of nullity of the amended by-laws, by alleging, that as a stockholder, he had acquired rights to vote and
be voted upon in the election of directors. Can G compel the SEC to cancel the amendment? Why?

No. The amendment is valid because directorship in a corporation is a fiduciary position involving trust
and confidence. Besides, if a person will be a director in two competing corporations, there is a
possibility that he will betray the trust of one or both of them because he cannot serve two masters at
the same time. As we have stated earlier, one of the three-fold duties of a director is that he must be
loyal to the corporation.