1. what is an appraisal right?

Appraisal Right is the right of the shareholders to dissent and demand payment
of their shares if the following instances occur:

1. The amendment of the articles of incorporation which has the effect of changing
or restricting the rights of the shareholders, or authorizing preferences in any
respect superior to those of the shareholders.
2. In case of a sale, lease, exchange, transfer, mortgage, pledge, or other
disposition of all or substantially all of the corporate property and assets as
provided in this Code
3. In case of merger and consolidation
4. In case of investment of corporate funds which for any purpose other than the
primary purpose of the corporation.

2. -what are the requisites to exercise appraisal rightp.723-724

1. Any of the instances set forth by law for the exercise of the appraisal right must
be present
2. The shareholder must have voted against the proposed corporate action
3. The written demand for payment of the fair value of shares must be made within
30 days from the date the vote for the proposed corporate action was taken.
Failure to make such demand shall constitute as a waiver of his appraisal right.
4. The price of the shares must be based on the fair value as of the day prior to
which the vote was taken, excluding appreciation or depreciation in anticipation
of the corporate action.
5. Within 10 days for the written demand for payment for his/her share certificates
to the corporation for notation that the same are dissenting shares
6. Payment of shares shall be made only when the corporation has unrestricted
retained earnings in its books to cover such payment
7. The stockholder must transfer his shares to the corporation upon payment by the
latter of the agreed or awarded price to the former.
3. can the dissenting stockholder withdraw his demand?

 No demand for payment may be withdrawn unless the corporation consents

thereto.
4. when are the rights of a dissenting stockholder restored?

 If the corporation consents thereto

 If the corporation abandoned or rescinded by the corporation
 Disapproved by the Commission where such approval is necessary
  If the Commission determines that the such stockholder is not entitled to the
appraisal right
All the right of the stockholders to be paid the fair value of the shares shall cease,
the status of the shareholders shall be restored and all dividend distributions which
would have accrued on the shares shall be paid to the stockholders.
5. what are the rules to determine the fair value of the shares

Upon written demand by the shareholder within 30 days from the date on which the
vote was taken, the corporation shall pay the stockholder the fair value of the shares
as of the day before the vote was taken, excluding the appreciation or depreciation
in anticipation of such corporate action.
If, within 60 days from the approval of the corporate action by the stockholders,
the withdrawing stockholders and the corporation cannot agree as to the fair value of
the shares, it shall be determined and appraised by 3 disinterested person, one of which
voted by the stockholder and the other by the corporation, and the 3 rd by two thus
chosen. Their finding shall be final, and their award shall be paid by the corporation
within 30 days after the award is made.
6. What is a non-stock corp?

It is one where no part of income is distributable as dividends to its members,

trustees or officers. The any profit which a nonstock corporation may obtain
incidental to its operations shall whenever necessary or proper, be used for the
furtherance of the purpose or purposes for which
7. Characteristics of a non-stock corporation?

1. It does not have a capital stock divided into shares

2. No part of its income is distributable as dividend to its members, trustees, or
officers
3. Must be formed or organized for charitable, religious, educational, professional,
cultural, fraternal, literary, scientific, social, civic service, or similar purposes or
any combination thereof.
8. Voting rights?

The right of the members of any class or classes to vote may be limited, broadened,
or denied to the extend specified in the articles of incorporation or by the bylaws.
Unless so limited, broadened or denied, each member, regardless of class, shall be
entitled to one (1) vote.
9. Can invest in shares or in another corporation?

As a general rule, non-stock corporation are not empowered to venture in a

profitable business. However, it may invest its corporate funds to earn additional
 income for paying its operational expenses and meeting benefit claims. Any excess
profit obtains as an incident to its operational can only be used, whenever necessary
or proper, for the furtherance of the purpose for which it was organized.
10. Where meetings of non-stock corp held?

It is held at any place even outside where the principal office is located, but within the
Philippine territory, as stated in the bylaws. Provided that proper notice is sent to all
members indicating the date, time, and place of the meeting.
11. Can a member receive the assets in case of dissolution? (Sec.93)

Determined by the Articles of incorporation or bylaws the distributive rights of the

members or any class or classes of member or provide for distribution.
12. What is a close corporation?

A close corporation is one whose article of incorporation provides that

a. All the corporation’s issued stock of all classes, exclusive of treasury shares,
shall be held of record by not more than a specified number of persons, not
exceeding 20;
b. All the issued stock of all classes shall be subject to one or more restrictions on
transfer permitted by this Title. (Preemptive Right)
c. The corporation shall not list in any stock exchange or make any public offerings
of its stocks in any class
13. What is the main difference of a close and an open corporation?

1. Not more than 20

2. Restriction on the transfer of shares
3. Specific Qualifications to be eligible as stockholders are usually provided
for
4. Public offering is prohibited.
5. May be directly managed by the stockholders, as the AOI may provide
6. There are rules on deadlock
7. A shareholder may withdraw his shares and may ask the corporation to
purchase his shares.
14. When acts of a director valid even without a meeting? 100

Unless the bylaws provide otherwise, any action taken by the directors of a close
corporation without a meeting called properly and with due notice shall be
deemed valid if
 a. Before or after such action is taken, a written consent thereto is signed by all the
directors
b. All the stockholders have actual or implied knowledge of the action and make no
prompt objections
c. The directors are accustomed to take informal actions with the express or implied
acquiescence of all stockholders
d. All the directors have express or implied knowledge of the action in question and
none of them makes a prompt objection in writing.
15. What is a provisional director?

Shall be an impartial person who is neither a stockholder or a creditor of the

corporation or any of its subsidiaries or affiliates, and whose further
qualifications, if any, be determined by the Commission.
A provisional director is not a receiver of the corporation and does not have the
powers of a custodian or receiver.
A provisional director shall have the power of an elected director, including the
right to be notified and to vote in at meetings of directors until removed by the
Commission or by all stockholders.
The compensation shall be determined by the agreement between such director
and the corporation, subject to the approval of the Commission which may fix the
compensation absent of any agreement or in the event of disagreement between the
provisional director and the corporation.
16. What is a deadlock?

If the directors or stockholders are so divided on the management of the

corporation’s business and affairs that the votes required for a corporate action
cannot be obtained, with the consequence that the business and affairs of the
corporation can no longer be conducted to the advantage of the stockholders
generally.
17. May the SEC interfere with the management in the management of the close
corporation? (power to arbitrate)

Yes. In case of a deadlock, the SEC, upon written petition by any stockholder,
may arbitrate the dispute. In the exercise of its power the SEC shall have the
power and authority to give orders such as
a. Cancelling or altering any provision in the articles of incorporation, by laws or any
stockholder’s agreement
b. Cancelling, altering or enjoining any resolution or act of the corporation, board of
directors, stockholders or officers
c. Directing or prohibiting any act of the corporation or its board of directors,
stockholders, officers or other persons party to the action
d. Requiring purchase of the shares of any stockholders either by the corporation
or other shareholders regardless of the availability of unrestricted retained
earning in its books
e. Appointing provisional director
f. Dissolving the corporation
g. Granting such other relief as the circumstances may provide

18. Distinguish preemptive right and appraisal right in an open corporation and a
close corporation? (appraisal: open - only causes provided by law; close - any
reason & preemptive right Sec 101

19. What is a corporation sole?

A corporation sole is a special form of corporation formed by the chief

archbishop, bishop, priest, minister, rabbi, or other presiding elder of a religious
denomination, sect, or church for the purpose of administering or managing, in
trust, the affairs, property, or temporalities of any religious denomination, sect or
church.
20. Can a foreigner which is a corporation sole acquire real property in the
Philippines?

A corporation sole may purchase and hold real estate and personal property of
its church, charitable benevolent, or educational purposes, and may receive
bequests or gifts for such purpose
In the case of Roman Catholic Apostolic Administration of Davao vs Land
Registration Commission, the SC explained that the corporation Sole is not the
owner of the properties that he acquires but is merely the administrator thereof
and holds the same in trust for the church.
21. What is a one person corporation?

One Person corporation is a corporation with a single stockholder. Only natural

person, trust or estate of a deceased person may form an OPC.
22. Rationale of one person corporation? (encourage entrepreneurship; form corpo
due to limited liability rule)

23. Can a foreigner establish an OPC? (Yes, no law that prohibits a foreigner to
establish an OPC)

24. Characteristics of an OPC

25. Requisites for limited liability to apply in OPC? Sec 130

26. How are corporate actions made? (Sec 129)

27. What are the reports required in an OPC?

28. How is an ordinary corporation converted to an OPC?

When a single stockholders acquires all the stocks of an ordinary stock of the
corporation, the latter may apply for conversion subject to the requirements required
by the SEC.