Amendments Problems:

1. X corp is a stock corp composed of Reyes Family. Because of the crisis, they decided to convert it
into charitable non-stock association. Could this be done? Why? Would your answer be different if it
was a non- stock corp at the very beginning? Why?

A: Yes it could be legally amend its articles of incorporation into a non-stock corp provided they waive
their shares of profits and without prejudice to creditors.
No. My answer would not be the same, in non-stock corporations , members do not have rights to
profits of the assets of the corporation. If it is to be done, then it is as if the assets of the corporation
are distributed to the members. The only way this could be done properly is to dissolve the non- stock
corporation and to reincorporate into a stock corp.

2. Stockholders representing only 55% of the outstanding capital stock of corp A attended during the
meeting.hence 2/3 of the votes needed to approve the amendments of AOI which was previously
approved cannot be obtained.the directors propose 2 course of actions: 1. to request those present
to approve amendments and allow the board to convene in another meeting 2. solicit the votes
required for the amendment by writing the absentee stockholders. Which orf these can be resorted

A. Both. However if the amendment involves extending term or increasing/decreasing stock then only
the first alternative may be resorted to

Previous Midterm Exam

1. Founder’s share is given to those who helped organize the corporation , as a form of reward to
founders. It is subject to approval of SEC befor Founder’s share is duly given. There is now, under the
RCCP a 5 year limitation set by Sec. 7 of the RCCP which states that .”Section 7. Founders' Shares. -
Founders' shares may be given certain rights and privileges not enjoyed by the owners of other stock.
Where the exclusive right to vote and be voted for in the election of directors is granted, it must be for a
limited period not to exceed five (5) years from the date of incorporation: Provided, That such exclusive
right shall not be allowed if its exercise will violate Commonwealth Act No. 108, otherwise known as the
"Anti-Dummy Law"; Republic Act No. 7042, otherwise known as the "Foreign Investments Act of 1991";
and otherwise known as "Foreign Investments Act of 1991"; and other pertinent laws.”

2.The rule on corporate term is that Corporations with certificates of incorporation issued prior to the
effectivity of this Code and which continue to exist shall have perpetual existence, unless the
corporation, upon a vote of its stockholders representing a majority of its articles of
incorporation: Provided, That any change in the corporate right of dissenting stockholders in accordance
with the provisions of the RCCP. A corporate term for a specific period may be extended or shortened
by amending the articles of incorporation: Provided, That no extension may be made earlier than three
(3) 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 Commission: Provided, further, That such extension of
the corporate term shall take effect only on the day following the original or subsequent expiry date(s).
Extension of term is a statutory privilege and must be made within the time fixed and in the manner
prescribed by RCCP. No extension for corporate term may be made earlier than 3 years prior to original
expiry date unless there is justifiable reasons for an earlier extension may be grated by SEC.

3. The persons who are disqualifies to be directors are those persons who, within five (5) years prior to
the election or appointment as such, the person was:

(a) Convicted by final judgment:

(1) Of an offense punishable by imprisonment for a period exceeding six (6) years;

(2) For violating this Code; and

(3) For violating Republic Act No. 8799, otherwise known as "The Securities Regulation Code";

(b) Found administratively liable for any offense involving fraudulent acts; and
(c) By a foreign court or equivalent foreign regulatory authority for acts, violations or misconduct similar
to those enumerated in paragraphs (a) and (b) above. The foregoing is without prejudice to
qualifications or other disqualifications, which the Commission, the primary regulatory agency, or
Philippine Competition Commission may impose in its promotion of good corporate governance or as a
sanction in its administrative proceedings. (sec 26, RCCP)

4. Both must give Relief. The President of ABC corporation although a natural person as claiming to
have suffered in the consequences of bismirched business reputation may petition the court to award
moral damages . By way of exception, bismirched business reputation is a valid ground for claiming
such. On the other hand, the othe corporation may also use for the same ground as against ABC
corporation and in proper proceeding show that the same ground is available against ABC corp.

5. Commulative voting is what is allowed in the Philippine jurisdiction in the election of the board of
directors in a stock corporation. In a non-stock corporation it is only allowed if found in the articles of
incorporation. The basic effect of commulative voting is to increase the chance of minority stockholders
to elect a director;commulative voting ensures minority representation in the board.