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Definition of corporation: indefinite period of time with no

A corporation is an artificial being created interference by sovereign power.


by operation of law, having the right of
succession and powers, attributes and Other classes of corporations:
properties expressly authorized by law or
incident to its existence. Ecclesiastical corporation
- Religious purposes
What does it mean by an artificial being? - For spiritual purposes or for
Because it is treated as if it’s a person administering properties held for
religious ones.
Having the right of succession, means
continuous existence. Lay corporation
 Eleemosynary corporations
Submit to SEC o Created for charitable
 Articles of incorporation purposes
 Certificate of corporation  Civil corporations
o For the benefit, pecuniary or
Why choose one-person corporation instead otherwise, of its members
of sole proprietorship?
Limited liability, and sole proprietorship has Close Corporation
no separate juridical personality - Stocks held by limited number of
persons
Corporation:
 Created by law Open Corporation
 At least 1 person/incorporator (OPC) - Formed to openly to accept outsiders
Before: at least 5 persons as stockholders
 Terms of existence-in perpetuity
Before: limited to 50 years De Jure Corporation
 Consent of the state-dissolution - Existing in fact and in law

Classes of corporations: De Facto Corporation


1. Stock - Existing in fact but not in law
- operated for the purpose of profit
Components of a Corporation
Requisites of stock corporation
 Capital stock divided into shares Corporators
 Authorized to distribute dividends - Compose the corporation, whether
stockholders or members
2. Non-stock corporation
- No part of their income is Incorporators
distributable as dividends - Originally formed the corporation
- For public good and welfare
Who can be an incorporator?
Roman Catholic Church is a corporation by People/Person, Partnership, Association and
prescription, meaning they exist for an Corporation
A corporation cannot use a name identical to  Absentia
that of any existing corporation, it must be
DISTINGUISHABLE. Corporate Officers
 President, who must be a director
Common and Preferred Stocks  Treasurer, who must be a resident
Common stock  Secretary, must be citizen and
 Stock which entitles its owner to an resident of the Philippines
equal pro rata division of profits. o Certifies the actions of the
 Complete voting rights president

Preferred stock Board of Directors-Corporate officers


 Stock that gives the holder a 2/3 majority of the capital stock
preference over the holder of
common stocks Powers of Corporations
 Redeemable shares-shares previously Preemptive rights- first dibs
issued by the corporation

Preferred stock and Redeemable stock are


deprived of voting rights.

Par and no par value shares


Par value shares
 Values are fixed in the articles of
incorporation and certificate.
 Cannot be issued nor sold by
corporation less than par. (watered
stocks)

No par value shares


 Price are not stated in the certificate
of stock but maybe fixed in the
articles of incorporation. (trust fund
doctrine)

URE (Unrestricted Retained Earnings)

Treasury Shares
 Shares which have been issued and
fully paid, but subsequently
reacquired by the corporation.
 No voting rights
 No dividend rights

Ways of voting
 Personal
Dissolution
 Proxy
 Not be less than 30 days nor more
Methods of dissolution than 60 days after the entry of the
 Voluntarily order
 Involuntarily
Dissolution by Shortening Corporate
20 days before meeting, notice shall be Term
given to each shareholder.  Effected by amending the articles of
incorporation
Notice of the time, place and object shall be  A copy of the amended articles shall
published in a newspaper published in the be submitted to SEC
place where the principal office is located  Upon the expiration of the term,
If no newspaper is published, publish in corporation shall be deemed
newspaper of GENERAL CIRCULATION dissolved
in the Philippines.  No need issuance of certificate of
dissolution
Valid request for dissolution:
1. Reason for dissolution Withdrawal of Request and Petition for
2. Form, manner and time notice were Dissolution
given  Made in writing
3. Names of the stockholders and  Verified by any incorporator,
directors who approved the director, trustee, shareholder or
dissolution member
4. Date, place, and time of the meeting  Signed by the same number of the
5. Details of publication said positions necessary to request
for dissolution
Corporation shall submit: Withdrawal shall be submitted:
1. Copy of resolution authorizing the
 No later than 15 days from receipt of
dissolution Commission of request for
2. Proof of publication dissolution
3. Favorable recommendation
Upon receipt of withdrawal, Commission
Voluntary Dissolution Where Creditors shall withhold action on the request for
are Affected dissolution and shall, after investigation:
1. Make a pronouncement that the
Petition shall be filed with the Commission: request for dissolution is deemed
1. Signed by majority of BOD withdrawn
2. Verified by its president or secretary 2. Direct a joint meeting of the BOD
3. Set forth all claims and demands and the stockholders whether to
against it proceed with dissolution
4. Vote at least 2/3 of the outstanding 3. Issue such other orders as it may
capital stock or 2/3 of the members deem appropriate
at a meeting

Corporate Liquidation
Filing objections to the petition
Every corporation whose charter expires, is f) Name and address of directors and
annulled by forfeiture officers
Whose corporate existence is terminated in g) Statement of authorized capital stock
any other manner, shall nevertheless remain h) Statement of outstanding capital
as body corporate for 3 years after the stock
effective date of dissolution i) Amount actually paid in

Foreign Corporation Resident Agent


 An individual residing in the PH or
Definition and Rights: domestic corporation lawfully
One formed, organized or existing under transacting business in the PH
laws other than those of the Philippines and  Purpose: receiving summons and
whose laws allow Filipino citizens and other legal processes in any legal
corporations to do business in its own actions
country or State.  Must be of good moral character and
of sound financial standing
Right to transact business in the PH
 License for that purpose Corporation will file with the commission a
 Certificate of authority written power of attorney.
In case resident agent is not found, the
Application for License: service of any summons may be made upon
 Submit to SEC a copy of its articles the Commission.
of incorporation and bylaws The Commission shall, within 10 days
thereafter, transmit by mails copy of such
Test to Identify: summons to the principal office.
a) Incorporation test
 Corporation organized under PH Merger or Consolidation Involving a
law-Domestic Foreign Corporation Licensed in the PH
 Corporation organized under other A foreign corporation authorized to transact
state-Foreign business in the PH shall be a party to a
merger or consolidation in its home country
b) Control Test or state as permitted by law authorizing its
 Nationality of Control Group incorporation, such foreign corporation
shall:
c) Grandfather Rule  Within 60 days after the effectivity
 Indirect possession of shares of merger or consolidation, a copy of
the articles of merger or
The application shall be under oath and, consolidation duly authenticated by
unless already stated in its articles of the proper officials of the country or
incorporation, shall specifically set forth the State.
ff:
a) Date and term Doing Business without a License
b) Address of principal office The corporation cannot sue but can be sued.
c) Name and address of resident agent
d) Place in the Philippines
e) Specific purposes Revocation of License
The license of a foreign corporation to  2 or more corporations may merge
transact business in the PH may be revoked into a single corporation or may be
upon any of the ff grounds: consolidate into a new single
a) Failure to file annual report corporation
b) Failure to appoint and maintain a
resident agent Procedures:
c) Failure to submit a statement of such 1. Board of Directors – plan
change 2. Present plan to stockholders – both
d) Failure to submit an authenticated corporation will have meeting
copy of the amended articles of 3. Articles of Merger or Consolidation
incorporation or bylaws or articles of 4. Submit to SEC
merger or consolidation - Can backout after vote
e) Misrepresentation of any material
f) Failure to pay taxes, imposts,
assessments or penalties
g) Transacting business outside the
purpose
h) Transacting business as an agent or
on behalf of any foreign corporation
i) Any other ground as would render it
unfit to transact business in the PH

Issuance of Certificate of Revocation


The Commission shall issue a corresponding
certificate of revocation.

Withdrawal of Foreign Corporations


A foreign corporation licensed to transact
business in the Philippines by filing a
petition for withdrawal of license.

No certificate of withdrawal shall be issued


by the Commission unless all the ff
requirements are met:
a) All claims which have accrued in the
PH have been paid or settled
b) All taxes, imposts, assessments, and
penalties, if any, lawfully due to the
PH Government
c) The petition for withdrawal of
license has been published once a
week for 3 consecutive weeks in a
newspaper of general circulation

Merger and Consolidation