Straight and cumulative voting illustration:
Persons guilty of violating the new Corporation
Term of dictatorship- shall hold office for 1 year,
however, incumbent directors shall continue to be
directors as long as their successors have not been
elected and qualified under the doctrine of “hold over”
Limitation of the election:
1. Presence in person or by written proxy, the
owners of the majority of the outstanding
capital stock, or majority of the member
entitled to vote.
2. Election shall be by ballot, if requested
3. No delinquent stock shall be voted
4. The candidates who receive the highest amount
of votes shall be declared elected.
5. The required notice must be given.
Sec25. Corporate Officers
1. Directors of the corporation
2. President
3. Corporate Secretary
4. Corporate Treasurer
5. And others, stated by in the by-laws.
Qualifications
President- he must be a director
Treasurer- may or may not be a director
Secretary- May or may not be a director but must be a
resident and citizen of the Philippines.
Note: Any two or more positions may be held
concurrently by the same person except, that no one
shall act as a president and secretary or as president &
treasurer at the same time.
**Directors or trustees cannot attend or vote by proxy
at board meeting
Sec 26. Within 30 days after the election- submit to SEC
*Report of vacancies- immediately
Sec 27. Persons disqualified as directors, trustees or
officers
1. Persons convicted by final judgement of an
offense punishable by imprisonment for more
than 6 years
2.
Code, committed within 5 years prior to the
date of election of appointment.
Sec 28.Removal of directors or trustees
May be removed with or without a cause at a
meeting called for that purpose by the vote of
stockholders holding or representing at least 2/3 of the
outstanding capital stock or, if the corporation be a non-
stock corporation by a vote of at least 2/3 of the
members entitled by vote
Requisites to be complied with before a director can be
removed:
1. The removal must take place at a meeting called
for that purpose
2. Notice must be given to the stockholders
purposely for that removal
3. By a vote of 2/3 of the outstanding capital stock
Sec 30. Compensation of directors (entitled only when)
a. Stated in the by-laws
b. Resolution granting them compensation is
approached by the vote of stockholders
representing at least a majority of the
outstanding capital stock at a regular or special
stockholders meeting
 Fixing Compensation
 Amount of compensation- no case the total
yearly compensation of a director exceed 10%
of the net income before income tax
 Per diem reasonable (entitled whether or not
fixed in the by laws)
Sec. 33 Interlocking directorates
 When one, some or all of the directors in one
corporation are also the directors in another
orporation.
 Conracts- generally valid
 When not valid:
o In case of fraud
o Where the contracts are not fair and
reasonable under the circumstances
 Stockholders exceeding 20% of the outstanding
capital stock is considered substantial for
purpose of interlocking directors.
Sec 34. Doctrine of “Corporate Opportunity”
 Effect of disloyal directors- ground of recovering
profits in the transaction, that is the benefit or
opportunity of which the director is equitably
bound to give to his corporation
 Ratification by stockholders- acts of disloyal
director can be ratified by vote of the
stockholders owning or representing at least
2/3 of the outstanding capital stock.
Sec 35. Management of a corporation may be
delegated to an Executive Committee
 Composed of not less than 3 members of the
BOD; appointed by the BOD
 Acts that may not be delegated to the Executive
Committee (5 acts enumerated in the article)
Sec 37. Voting requirement for extending or shortening
corporate term majority vote of BOD or trustees and
consented by at least 2/3 of the outstanding capital
stock or by at least 2/3 of the members if it is a non
stock corp.
Sec 39. pRe-emptive right of stockholders- a right of
existing stockholders of a corporation to subscribe or
purchase shares of stock in proportion to their
respective shareholdings, before the shares of the
corporation are offered to general public.
 Applications- capital stock is increased, shares
from the unsubscribe portion (original shares)
Sec 41. Power to acquire own shares- (3 reasons
eliminated in the chapter)
 Trust fund doctrine- capital and other assets of
the corporation are trust funds to be used for
the payment of the debts of the corporation.
Sec 42. Power to invest corporate funds in another
corporation
 Similar or incidental or related to its primary
purpose- the board can invest without the
consent of the stockholders. Only the vote of
the majority of the BOD.
 Different business or purpose- affirmative vote
of majority of the boardconsented by 2/3 of the
outstanding capital stock.
Sec 43. Power to declare dividends
Out of the unrestricted retained earnings which shall be
payable in cash, property or stock on the basis of
outstanding capital stock held.
Sec 44. Management Contract
An agreement whereby a corporation delegates the
management of its affairs to another corporation for a
certain period of time which may not be longer than
five years for any one term.
Sec 45. Ultra vires acts of corporation
An act or contract of a corporation entered beyond the
powers expressly or impliedly conferred upon the
corporation
Illegal acts- contrary to law, morals, good customs,
public order or public policy.
 Not ultra vires acts of a corporation are illegal
but the moment the act is illegal it is always
ultra vires.
Sec 46. By-Laws
Rules and regulations by the stockholders for their
internal government.
 If adopted before incorporation- must be
approved and signed by all the incorporators.
 If adopted after incorporation- must be voted
by majority of the outstanding capital stock
(voting and non-voting)
 Time for adoption- within one month from the
issuance of Certificate of Incorporation.
 The filing of the laws are now mandatory.
Failure to file the by-laws on time will give the
SEC the power to suspend or revoke the
certificate of incorp.
Sec 48. Amendment, alteration and repeal by-laws
 To decide by a majority vote of the bOD and
owners of t least majority of the outstanding
capital stock.
 The amended by-laws shall only be effective
upon the issuance of a certificate by the SEC
that the same is not inconsistent within the
Corporation Code.
Sec 49-50,53. Kinds of meeting (stockholders&directors)
Regular meetings- shall be held annually on a date fixed
in the By-laws. If not so fixed, on any date in April of
every year as determined by the BOD
Special meetings- held any time upon the call of the
President or as provided in By-laws.
 Notice is required
o Special meetings- one week
o General meetings- two weeks
o Waiver of notice is allowed
Regular meetings of directors- held monthly unless the
by-laws provides otherwise.
Special meetings- held any time upon the call of the
president or as provided in by-laws.
Sec51. Place and time of meetings of stockholders or
members
Stockholders’ meetings- whether regular or special
shall be held in the city or municipality where the
principal office is located & if practicable in the principal
office of the corporation.
 Any meeting held outside is invalid, except if all
stockholders are present to duly represent
Director’s meeting- shall be held anywhere in or
outside of the Philippines unless the by-laws provide
otherwise.
Section 52. Quorum for stockholders meetings
Consists of stockholders representing majority of the
outstanding capital stock.
Sec 55. Pledgor or mortgagor of shares shall have the
right to attend & vote at meetings of stockholders,
unless the pledgee or mortgagee is expressly given such
right as recorded in the corporate books.
Sec 56. Consent of all the co-owners shall be necessary
in order to vote the shares owned in common. Consent
is not necessary in the ff case:
1. There is a written proxy signed by all the co-
owners
2. Share owned in an “and/or” capacity
Sec 58. A proxy to vote share of stock is an authority
given by the holder of the stock to another, the latter to
exercise the former’s right to vote.
 Proxies shall be in writing, signed by the
stockholder or member & filed before the
scheduled meeting with the corporate secretary
Sec 59. Voting trust
Agreement between a group of stockholeders of a
corporation and the trustee of by a group of identical
agreement between individual stockholders & a
common trustee, whereby it is provided that for a term
of years, of a period contingent upon a certain event,
control over the stock owned by such stockholders,
either for certain purpose or for all, shall be lodged in
the trustee, with the powers to direct how such control
shall be used.
 Voting trusts are valid unless the purpose is to
circumvent the law.
 It must be in writing & notarized and shall
specify the terms & condition thereof.
 A certified copy of the voting trust agreement
shall be filed with the corporation & with the
SEC otherwise said agreement is ineffective &
unenforceable.
 No exceeding 5 years
Sec 60. Subscription contract.
Sec 61. Pre-incorporation subscription requirement
 Irrevocable for a perios of at least 6 months
from the date of subscription
Sec 62. Consideration of stocks
Sec 65. Watered Stock. Stocks issued not in exchange
for its equivalents wther in cash, property or stock
dividend or services.
 Officers having knowledge shall be solidarily
liable to the corporation and its creditors.
Sec 76,77. Corporate combination
1. Consolidation- the union which results in the
creation of a new corporation, and the
termination of the existence of the old one.
2. Merger- the absorption of one corporation by
another, which retains its name and corporate
identify with the added capital.
Sec 81. Appraisal Right.
In the following instance, a stockholder who did not
vote for any proposed action of any Board may
withdraw from the corporation.
a) Amendment of the AI
b) Corporate disporition
c) Merger or consolidation
Sec 82. 30 days after the vote was taken, the
stockholder who voted against the proposed action may
demand the fair value of his shares.
Sec 92. Qualifications of trustees:
 Trustees of non stock corporation must be
member be member of corporation
 Majority of the trustees must be resident of the
Philippines
 Trustees of a non stock corporation may be
more than 15.
Sec 96. Close corporation- a corporation which the
stock is held in a few hands, or in few families & which
stock is not at all or only rarely dealt in buying and
selling.
Sec 106. Educational corporations (stock & non-stock)
Sec 109. Religious Corporations- is a corporation
created to secure the public, worship of God.
 Kinds: corporation sole (one which is composed
of a single member & his successor in the office)
 Religious society- composed of several persons.

Sec 117. Methods of disso;ution

a) Voluntary dissolution
b) Involuntary dissolution