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    Title 4 & 5 Corpo Code

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    Ira Dìmples B. Barrameda

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    © All Rights Reserved
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    TITLE POWERS OF CORPORATIONS _n corporat al fan e powers n exercises its powers through ts boacd of dices ‘exceptin instances where the ssn requires stockholders’ approval for certain specific acts ay as no pte cp thee erent tron sy be coporation ‘Code and those that are implied or Incidental to its recom, a corporation exercises sald powers through its board of es and/OF fered that the ie a Ms sy a ily suthortad fers and agents Thus, ts al fa corporation to suc and be sedi any cour i ta th ovr dretors tha exerts Ks corporate powers In th corporation ke esi facet De cial cual persone ly autor fr the purpose © einen othe bard of decors? ithas been ae oe “tn eae (@) Tosueand be: % ) To have perpetual feces the cerifca of incorporation provides otherwise; (@ Toadoptand use a corporate seal: To amend its articles of incorporation @ © provisions ofthis Code; ‘To adopt bylaws, not contrary to law, and to amend or repeal the same in acco {in accordance with the ‘morals or public policy, rrdance with this Code: ‘sell stocks. to tn case of stock corporations, to Issue or scl) tat subscribers and to sell treasury stocks In accoroen oY Provisions of this Code; and Pledge, mortgng, Personal property, ‘cluding $8 ‘orporatios nably and tel io as prescribe by law: % ‘juridical persons: Sree ee orwerertminthta _rrvug iv - POWERS OF CORPORA 112 make reasonable donations. Inludlng those fp Teme roan cartabl, cra scien sr pores Proved That no orelgn eorpoi”y Sis don in ald of any paliteal party or cangige™ Bie done partzan ola atv, oo Foceahsh pension, retirement, and other plans for TocstablhPetpustes, officers and employees; ye 2 ses serach other powers as may De essential orn to cary out Its purpose oF Purposes as stated in the ages) Incorporation. ‘The above enumerations refer tothe general nates of coer which are exerised by the board of directors and/or its duly ‘officers and agents. uni 0 o cS) Fower ofa corporation osu ‘haere st iran action brought by a stockholder nba the coporaon to enforce corporate rights against. the coer ddrecom,olcers o eter Ineders Under Soctons 23 anf 36a Corporatio Code (ow Seton 22 and 35, Revised Corporation a Secor or ocr a proietudr the bylaws have te ip ‘thier ornotacorporsion should sue Since there diectorsorotis| ever beige, or imp tee wrong or et Aetans sodtoles are permed bylaw to ring an ation St the eroraton to hole these dittrs and aie seth Sera tas there pry in interest the corporation We Sodtederis ere oni pry? ote vy corporation incrporated under the Reise Corer asthe power and capac ohare eet exienc nish ch corporation provides terse Note: a vr corporation a incorporated under the Reed Cope eubipawer end capocy to encer nt gatnarhla Jn 92 {ansldation or any eter commercial agreement with nau Note: | ws ‘ shat gve donations in ald f° Sen | en can “ ‘Party oF candidate o for al similar ‘or for purposes isan ical activiOr er on expres fa Se ae \ to adm o ‘corporation: lease crvernen wee sven rant, hold, convey, sll ease, d otherwise such real and . seal or ‘bonds of other of Me tau business of the necessarily ‘and the Constitutlo require, subject tO Joint venture, merger. To enter into a partnership. ‘with natural teary any over commer remem asin 12007. eytatl inne que - POWLIS OF CORPORATIONS ge 36, Power 0 Extend or Shorten — $i raitn may extend or shortens tran sated nbc eet rena go a ata meting by then Scent ea meer ora ts members Wren nea teen, aie tme and place of the mesg shal be sent tw naignders q amapers at thet respective place ofresdencearshowsignee eisey Se'emporation, and must be deposted tothe adaresce tee oot in sonth postage Prepal served personally orshen aren eas Syaws or done with the consent ofthe sacklaerseaceeeronne accordance withthe rules and regulation of the Cnmmsaoeen oe Seefvecront ata meses. Incase oxen of epee Sesning stockholder may exercee eight sageseer ane {onions provided in this Cod ota ete Power to Extend or Shorten Corporate Term Requirement {Approval by a malorty vate ofthe bard of diretors or ruses and Ratification by the stockholders representing at leat 2/1 of the ‘ulstanding capital stock or by atleast 2/3 afthemmembers incase of no stock corporations. What ts APPRAISAL RIGHT? ‘Appraisal right means that a sackler who disented and voted against the proposed corporate action may choot ge oxo the ‘arporation by demanding payment ofthe flr market abe of is shares ove: der Incas of extension of corporate erm any senting soc may exercise his appraisal right Aue Write oie ofthe ropa cont ed orn he ‘pra term a safed traces of rerio on i tnd of he meting sale sotoueror meee he “Specie place etc orsown ies of pra ‘tbe depot tte arse ne ost ow PREP a ‘ered personally, or when alowed inthe bylaws or dane withthe consent Soctolder ent ecroncaly i arcordne with a "ava Coisonon te een ete MEI ® InG.37, Power to increase or Deerease apt Sok Ina, Cee oF tease Boned Indebtedness. = NO CmPEaNON 20 A ended "eehednene gaa Stock oF nr ory vote ofthe board of 30s muaw-rowesorvneoo= . oe SSS ee tires ont Seine fearon : : pert mF SeMice Shown i he books af the corporation and served on the pe nov alyrortaroughelectronicmeans recognized inthe cq awe andor the commission's rales 85 8 Valld mode fy notices. ‘Acertifiate must be signed by a majority ofthe di rector, corporation and countersigned by the chairperson and secretay ot Stockholders meeting, setting forth: crete et, ® » @ 3¢ requirements of this section have been That te re hhave been compa Teumount ofthe nrease o decrease of thee Inearafaniaceaseofthe api stock thease | Sct or numberof shares of we-par sock een isctbeg the nomen nadovaliles and adarcses na Dersnssubactbng it amaunt of epi ser ae par sta susced by each andthe amount tte subcription In exo property. arth ance Sl scar aunt af shart of tyr cas fachstocbldr such nerense stor the porpone ota tfflective stock dividend therefor authorized fal Any tnded. Indebtedness tobe incurred, creel ¢ irre amount ofstockrepresented at he meting ad The vote authorang the Increase or decrease othe cal stock or the incurring, creating or increasing of any be Aneatoneg. Tene oF merece ote @ © 0 cel Mere odes sth apa sc oe Issuance by tne pera42R. Mer approval by the Commlssi% 2) shall be deemea orttssion of ts certificate of filing the Pig f med increased or, ‘decreased and the ering ee 306 L TIONS Y _rrte v- POWERS OF CORPORA ormpving with the eaUlFeMents of the cg, sone coure of comoving th te es Cormay {Coe for increasing its autho rapa he ECHR fh Eh capil stock and om ed without need of elther stockhaiays a ss cndlshresot tare authorized bea at sere casagsareolers oro members of the general pa cere ang tetored ep ck nde st acorn are econ a, ered Corperoncey at Sen ee etal conten claecortaee carat Fae eno SC arly wn eae sae Pastner elip decunentton equa ea Seite eH nec offing cenenesT ot SsthrecTupe sok submien of" fanel enor ijelipen pet Cte le haantne CP eoea stilt ley mening hen sealers oped inti cpl sche hertbo We aor eee ny arid pl soc ropes tobe sued sok ns theakcequeneeresen ore acing they requ neon ‘ur ue ai teers sino ye coos ado tng frm Rp of te eng aaa Mere ‘holding two-thirds (2/3) of the outstanding capital stock is required a 38 of the Corporation Code (Now Section 37, Revised Corporates Gedo alr meting tl ota pup te dte if of the corporation may be expected to take pains to inform & Spartolders ofthe financial condition and prospects ofthe corporation” roped watt hc oop be ae Increase or De Regutremern® 2 OF Decrease of Authorized Capital Stock i 2 e ae io the proposed increase or diminution of oe Dropoed eres nace ofthesoclders mest Nie, | ‘must be ac oF diminution ofthe capital stock is 0 B® qt * be addressed to eathstocilder at his pace of #2 uel POWERS OF CORPORATIONS 1. sing of any bonded indebtedness authorized, a the cert: lar: Pros , 85 the certificate of may declare: Provided, That the Commission shall not acegpten sare tthe time of the filing ofthe ceruineate,shewiag yon ea een (250) te ete te hat eam ree SP Seek has Ben sa 3 een ald aa a eo) ibe asa sap valuation of wii rege wasn at Fare on has ben eset ne Fe) sie ct decree n opel ee ea ee eek je Ta tesa prea reared Gs Nonstock corporations may incur, create or increase bonded indebtedness when approved by a majority ofthe board of rusteesand satleast two-thirds (2/3) of the members inameeting duly called for thepurpose. Bonds issued by a corporation shall be registered with the ‘ammission, which shall have the authority to determine thesufciency ofthe terms thereof ‘THREE INSTANCES OF DISTRIBUTION OF CORPORATE CAPITAL ‘The Trust Fund Doctrine proves that subscription tothe capital ‘todkofa corporation constitute a fund to which the creditorshavea right to look forthe satisfaction of their claims. This doctrine isthe underlying brincple in the procedure forthe distrbution of capita assets, embodied in ‘he Corporation Code, which allows the distribution of erporate capita only ‘nthree instances: (1) cee ‘atlngs ond (3) dssliin nd svatal udasenobecesaain* ‘Under Section 38 of the Corporation Gade ow Scion 27, Reed {2rperaon code) corporation engaged nincesingitsautorzed apa ck th the required vot ofits Boar of Drearsandof is soko, worn statement ofthe treasurer ofthe coronation Sn 2 ny ach ncresed capt 80 as Sao aepn (eon SE ne nm ‘Mheribed hasbeen pat either in ata ash oi FOE aSTeTeS ation In other words he corporation US aC TSE Fercent (25%) ofthe newyorcontemPorene “Sara ack Ht me “or | me [lel al lll I a Sotorton yes nr one Pe Ne ale the right of corporate creditor; Ti eT aay mie NE ed wut nay ree acer va fer ma ed ty oe eer caren nc reese sowing ae et eee Incurring, Creating or Increasing Bonded Indebtedness. Bonded indebtedness Tetsa long-term indebtedness seewred wel by real proper ste 2 the requirements othe power a cto ee Sondes ebenc ea te some with te power ME oF coca gfeopel ck are eras may ha, Inene hen pprave ome tet wets Seo members ee 1 ete or inceaze bonded urd of tes and of yee fore Registration of the bonds Bonds ised by a corporation shall be ‘nd Exchange Commission, which shall have the faliciency ofthe terms thereof ered with the Secures eno to determine the ersofa sack $26.38, power to Deny Preemptive Right. ~ At a issues oF Seperation shal coy presmptie aN AST repete G{SPosition of shares of any class IB PTOPOTON,, the articles of ira han te as Aeompive ghana enon shares Esme he etl sce rings oC ER ay err kina hates nue (70) <1 a0 ‘TITLE IV POWERS UF 4 erty needed for corporate so I ene debt. Puro foment re gst Men rol ofl acoder oy g i latter ef sceshorealngs, percent aye ptm Hh 0 be he sn, ne ie ee i MS rcenpe ight must be exercised within the period sated y the orl of eaportion othe by-laws. 4 snot avallable (POWER TO DENY PRE. Preemptive right ry ME 4. Shares tobe issued in compliance with laws requiring stock efeig ‘minimum stock ownership bythe public; and 2 Shares tobe issued in good fith withthe appraval of the soci representing 2/3 of the outstanding capital stock, In exchange ft pery needed for corporate purposes oF in payment of «peal fata dete Problem: N Inc fed an application for the approval of the incest juhorzed capital On january 8, 1975, a decision was rete! ‘apogee is Hsuant to the approval_given by the Na TFfkommuniations Comision (NTC), Nine filedits Amended AS esse amine SEC When theamended artes were 5 Be eee athorzed capo P1000 was aren) 2 Posaaresst, pal of 2900.00, the subseriers subse 580000 of which P145;000 was uly pak 7 manta et, In entered into a contract with € ne. eta REMC ee 300 re Me 23,2979, thesochokders of N nc hel he Dison ee le thal seven rectors to he hairman oft 222" 3979-1960, inthis election, X was wSeated sone ote daar’ a President ofthe Corporation but ®™" "rectors together with his wife, W. 310 {rTte tv - POWERS OF CUKFURA raed on bea nd or he Bene Of the sharehoy cerpoation? er other Dispston of SSS. - Subject tot srr oan Aa No. 10667, otherwise Keown ay qt’ Pi rt A Ma erste laws, 9 corpo, ‘Ship cots ard of etors or trastees seek MC mae eerste dpotea prope aa Seer and cons and 0 uch considera gee recs tends rer ntuments forthe pe Sete meron sta oad abe ‘may deem expedient se tte te tay ‘soeolders representing atleast two-thirds (2/3) of ame 28 SSSoe Tiealegty tm toca ‘octhldersormembery meting duly called forthe porno 8 nm eres vie ane ee ssa ami a Snel eet rs samen re embers wid, es inoffeev, enter iat ay ot at Say a herae aren rede corporate proper and assets Saeed an "8th Purpose for which it was incorporsel ene the meet te proposed action, Dlaces Sal be adden et Aton and of the timeandla Seposted tothe seed persona ders or members at ks of the corpraton Post oce with postage pe awed by the bylaws or done wid ‘lectrontcali: Provide Tet eee the righ of appatal ne « Spproval by the stockbolde Or tees may never? Vi nt YW gv POWERS OF CORPORATIONS ew- an te sc nwt pce atv ro ar gen wee i suns cum nase ot wn ep Joe In following were elected inthe May 19,1979 election: Ay. ee nee ea ta a a ra Ce tebe oy ae esas cnet th in of equip ire the stockholders ofN nc. have aright of preemption to the ee ayer seen ee eeeee Matas toes ne sept 1600 ar eek Fab at a Se ug es eg ‘This Court in Benito vs. SEC, etal has ruled that ean tin ie nin aac criiew eee stent a ore ears sao a ee ei fore te hee rere geen Le re tenho ee nar a 2 fe i ete etc Ma ge Thecueneredinanestoe saosin ananigasinnl ia ie same cs Smee eam wo ere Bete poer cae cee ere wie! ey amc ‘slackholders was violated by the a ino corporation oF @ srce preemptive rights i 6 Or ing a person den ts eng art I POWERS OF CORPORATIONS on, abandon such sale, leas, exchange, mortgage, pledge, or asreiseposition of property and assets, subject to the gine of tag other under any contract relating thereto, without further action or tes Hythe stockholders or members. me Nothing In this section Is intended to rest ration, without the authorization by bers, to sell, lease, exchange, mortgage, pledge, or otherwise e of any ofits property and assets ifthe same is necescary nthe Gul and regular course of business of the corporation et if tre oceeds of the sale or other disposition of such property and assets [halle appropriated for the conduct ofits remaining beslgces trict the power of any the stockholders or ‘While the Corporation Code allows the tran alltheproperties and assets ofa corporation, ‘The only way the transfer can proceed without prejudice to the creditors isto hold the assignee lable for the obligations of ‘heassignor. The acquisition by the assignee of ll or substantially all of the assets ofthe assignor necessarily includes the assumption ofthe asignors ‘abies, unless the creditors who did not consent tothe transfer chooee to ‘eicind the transfer on the ground of fraud. To allow an assignor to transer alls business, properties and assets without he consent ofits creditors and ‘whout requiring the assignee to assume the assignor’s obligations wil ‘Aftaud the creditors. The assignment wl place the assignor's assets beyond the reach of its ereditors® sfer ofall or substantially Requirements: ‘Written notice of the proposed action and ofthe time and place of the ‘meeting shall be addressed to each stockholder or member at hs place tursidence as shown on the books of the corporation and deposited to DE addressee in the post office with postage prepaid, or served Fetsonaly, or when allowed by the bylaws or dane with the consent of, 2. [teStockholder, sent electronically; _Proval by the majority vot ofits board of directors or trustees cation by the vote ofthe stockholders representing atleast 2/3 of ‘Outstanding capital stock or incase of non-stock corporation, bythe 4, aQtt oft least to 2/3 ofthe members; and "Any desenting stockholder may exercise his appraisal ight; Note: ‘SEC approval isnot required == "TITLE IV- POWERS OF CORPORATIONS Note: he determination of whether OF Not the sce yy sutra al ofthe corporation’ properties and assets mug’ 0 ag onsen ron te font ogee Substantially allof the corporate assets ‘hal orate dspston sal be deemed to cover subs the corporate property and assets ty forwhich twas incorporated. atication not required “if sone aces inthe sta and aula cous of saidcorporations oF w i te proceeds ofthe sale or other dspostion of suc ite position of such propery ng $8.40 Power io Acq Own Share. Provided thatthe coo tasuaresriced retuned eringsinits books tocaver these vera or ape ack comporation shall ave he peo Durcas or acquires om shares fora legtimate copay ‘oF Purposes, including the following cases: ea ant (9) Tealnnat ractoal shares sing out of tac ied colt or compromise an indebtedness tothe cory ring ao wpa subscription in a delinqungy eed co, BPurctse delaguent shares sold during sa salen = issenting or withdrawing stockholders entitled © ent for ther shares under the provisions ats Cle Instances When LTociminae tet ACorporation May Acquire Its Own Shares 2 Tacit cin hres aringoe sf ceantondn {SpRonlsean indebtedness othe corporation stile ion, in a delingeney sale and tl 3.Topay disor 2! during said sale; ener tarawing stockholders entitled to pay 4 Tome weer eons a i oder Redeemable hares rear a efecta decree, Finca tea of cata tose ae Darn eels entre aeadockin the manage iy nh chase attheirfarvalueot earings ec orPoFation regardless of the aval nog nits books ar bythe other stock less of existence of retained earning ol ay Socthlder a4 TITLE -rumene rized capital stock (2) purchase of redeemable ont ' ets or ee cence of am Hy Saez han nd eel udton eal oration mand are sockolers of 2 Corp Later, 2 cy mptive rights to newly issued shares of stock Xand ¥ von pe serge rt ot2.27 sare based on the book valu ofthe shares" * Or orp fund the flr value ofthe shares demanded mscrpable It insisted that the market value should beget PuAt/share and thatthe payment could be made only 128 unrestricted retained earnings in its books to cover the cia shares which wasnt the case = The sagrement onthe valuation ofthe shares led shares led the pre se ests pal commie, eich of them woatay tative, who together then nominated the third member te ‘oudbe haan ofthe appraisal committe. The appa cons ‘epurted Ks valuation of ?2.54/share for X and Y. Subsequent Ka anded payment based on the valuation ofthe appraisal ome theo oC efsedXandY’s demand as they could be pant afin pata had urestrced retained earnings to coverheart demacgats Dutthait hed no retained earnings at the time of zi ‘mand as bore outby ts Financial Statements Comprefasal to pay, Xand ¥ sued 2 Corp frcailes® c prove ERC? A sodden i the right to donee? who dissents from certain corporate ai now asthe YE of the fair value of his or her share dof the conerae ete appraisal is expressly recognized Che i Now Section a Revzed Corporati, ° appraisal may be exeresed whe ve parent action Is taken. eserves the PUM relelder to have his interests pure common law, pees race there were originally cot! ode ter 8cmperaton hat tre or pare ice aang yas al power to acquire or pu lid for a corporation (°F : *uch purchase was an indirect meth a w | Yamane ea st Pomene wr wena are fractional shares? What or ctonal shares are shares Proc shares which are tess than one share all ener a 7 ek "the corporation may only acquire is own rnd etalned earnings. ‘nthe presence of races eat acta Na reece tt ot sislsof unrestricted retained earnings ‘The SEC has exclusive supervision, control and repulstory urisicton to investigate whether the corporation has unresuicted sealed {mings to cover the payment fr the shares and whether the purchase for “legitimate corporate purpose. “These provisions of the Corporation Code shouldbe deemed written lnto the agreement between the corporation and the stockholders even If thereisno express reference to them inthe promisory note. The principle vellsetled that an existing aw enters into and forms part ofa valid contract withoutneed forthe parties expressly making reference tit The requirement of unrestricted raed earings t cover the stares i based om the trust fund doctrine whic meus that the cpa 3k property and other ase af a corporation are reared 35 eu in "stir the payment of corporate cers The reasons that credits of4 coportion are prefered over the stoclboes inthe dsbiin of ‘otis Tere can be no dan of aes among, he "shaders without st paying corporat eit Hac. ay spesion tarot ind to the puso restos mandi rears {{erPeration have the right to assume that so long as there ae oustanding ‘hd labies,therDoad of directors wil not se Be assets fe eration to purchase ts own tock” Thre tata ital mees of distribution of orporate ‘The Trust Fund Doctrine proves ta sions the cpa iekota corporation eonstute a fund which he eredtor BME 2 EN the satsaction of thet lms Tals doce the wndeng le inthe procedure forthe dstribtion of pal a5 emo operation Code, which slows te dssibaton of covets Instances (1) amendoent ofthe ries of i age of nied iay wo cedars oe wn Se apted by econ or saute eee Pa ae Judding a corporation from purchasing its own shares. In some. Wd sen hore te nph rete ob sap eae se thorky prc laa hn eee ee {rothers, shares might be purchased even out of capital provided the fet edo wee tot peed The sae ee guts ogi he Cpetonbyseortenttamsnd se ernment fsa nde fre ponte of eos ow, however» export cov pac Aor shes sored pant ede on ups peta eae ugha corporse purpose he Palppaes is re tad nseton ote oprtn te ow Sein Red pra co). To ppt shale made tay dng toler nes secur has nesses eaming inf ltt Semen ines espn a eae resid ail wns sto in caper Seton Reve orporson Code po ‘cto nt ae os res wit 26a be ‘er vein nds Saline reared ‘The trust fund doctrine backstops the requirement of Unrestricted retained earnings to fund the payment ofthe shares of statat the wieving cine. mtr scr 226k property. and other assets ofa corporates ee saseauty ton rene ase Te ctr acon ae he "htt ame ith bard rca wate eit oe Sorceress rss eee among the stockholders without first paying corporate de. ts Ste Aisposition of corporate funds and assets tothe preiu of cred tulland voie s inther Corporation or iG: Power co invest Corporate Fu neyo fe aes or for any Other Purpose: ~ SWIC COE any other private corporation may oy jr than the primary eration, business, or for any PAFPOSe, oe othe ya majority ofthe ane ena se for which It was 01 i ‘the stockholders {earaot treet or trustees and (ale OF ota stock, "esenting at least two-thirds (2/3) 0 tte sl TITLE IV rune ~ rds 2/2) ofthe embers Inthe gy ty at east ote ity called TOF the puree ly ere meroent ane tie 20 Ae of te cate eepetoclnoler or member a the places diet eee corpration and depose a ine pon ae wth post prepa, Served peng tlearonsaly i acordance with the Fules and repay renin areecon ata mesg wi sor done with the consent ofthe stockholders: prado tty la cclolder shall have appraisal right ae" me See cette eich oe rnecessary to accomplish its primary purpose 47 P= Ge wade of erporon the approval of the west members shall not be necessary. mel negates eaccmplsh primary purpose {pot be malty of dof dirctors orang 2itypmollbesoaalen ormembs aay "LToaccomlsha purpose other than the primary purpon L Avprova ofthe ‘majority of the board of director me tcaten by te secholders representing ta onscreen (8 often { en-ckcrratns, aa scolds or mer

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