1.

Give an example situation of each ground of Voluntary and Involuntary

Dissolution.

VOLUNTARY DISSOLUTION

Voluntary Dissolution where no creditors are affected

 The director of Coffee Folk Company made a call for a meeting.
Subsequently, notice of the aforesaid meeting is given to the stockholders by
personal delivery, and notice of said meeting is published in a newspaper.
The meeting was held for the discussion on the dissolution of the company.
The resolution to dissolve was consequently approved by majority of the
stockholders of Coffee Folk Company. Afterwards, a verified petition for
dissolution is filed with the SEC.

Voluntary Dissolution when creditors are affected

 The director of Coffee Folk Company made a call for a meeting.
Subsequently, notice of the aforesaid meeting is given to the stockholders by
personal delivery. The decision to dissolve the company has been concluded
and approved by the stockholders representing 2/3 of the outstanding capital
stock. Afterwards, a verified petition for dissolution is filed with the SEC, upon
which said petition is verified by the secretary of Coffee Folk Company. The
SEC subsequently issued an order fixing the deadline on May 12, 2021 for
filing objections. Said order is published in the newspaper and posted in three
different places in the City of Malaybalay.
On May 13, 2021after the expiration of the time to file objections, a hearing is
conducted to hear the petition to dissolve and the objections raised. After the
hearing, a judgment was rendered by the SEC dissolving the corporation and
directing the disposition of its assets. The judgment include the appointment
of Jose P. Chan as receiver to collect the assets and pay the corporation’s
debts. The SEC subsequently issued a certificate of dissolution thereby
effecting the dissolution.

Voluntary Dissolution by shortening corporate term

 Coffee Folk Corporation is a stock corporation that was registered with the
Commission under SEC Registration No. 1234 on December 20, 1975. Under
its existing articles of incorporation, Coffee Folk’s term of existence is for fifty
(50) years from its incorporation – that is, until on 20 December 2025.
On 19 December 2020, Coffee Folk amended its articles of incorporation,
shortening its corporate term which will end on 20 December 2023.
The Director’s Certificate submitted by Corporation states that on 19
December 2020, the amendment, shortening its corporate term, had been
duly approved by the required vote of the stockholders made in accordance
with Section 15 of the RCCP. The details as to the shortening of the corporate
term has been published in a newspaper. After the new term provided has
expired, without a valid extension having been effected, the corporation is
deemed dissolved.
 

INVOLUNTARY DISSOLUTION
1. Non-use of corporate charter as provided under Section 21 of the RCCP
 Coffee Folk Corporation is a stock corporation that was registered with the
Commission under SEC Registration No. 1234 on December 20, 2015. Under
its existing articles of incorporation, Coffee Folk’s term of existence is for
fifteen (15) years from its incorporation – that is, until on 20 December 2030.
However, after its registration with the Sec, it did not formally organized and
commenced the transaction of its business nor the construction of its works
for two years from the date of incorporation. Due to the causes determined by
the SEC, the corporation is deemed involuntarily dissolved.

2. Continuous inoperation of a corporation as provided under Section 21 of the

RCCP
 Coffee Folk Corporation is a stock corporation that was registered with the
Commission under SEC Registration No. 1234 on December 20, 2000. Under
its existing articles of incorporation, Coffee Folk’s term of existence is for fifty
(50) years from its incorporation – that is, until on 20 December 2050. The
corporation has commenced its business and transactions but subsequently
becomes continuously inoperative for a period of five (5) years starting April
15, 2014 until May 2019.
After due notice and hearing, the Corporation has been placed by the SEC
under delinquent status. However, the Corporation failed to comply with the
requirements and resume operations within the period given by the SEC.
Therefore, the SEC caused the revocation of the Corporation’s certificate of
incorporation.

3. Upon finding by final judgment that the corporation procured its incorporation
through fraud
 ABC Corporation was proven to be guilty in the formation of the corporation
through fraud. Moreover, an independent auditor who, in collusion with the
corporation’s directors or representatives, certifies the corporation’s financial
statements despite its incompleteness or inaccuracy, its failure to give a fair
and accurate presentation of the corporation’s condition, or despite containing
false or misleading statements. The violation is injurious or detrimental to the
public.

4. Upon receipt of a lawful court order dissolving the corporation

 ABC Corporation, a domestic corporation duly organized and existing under
Philippine laws is proved to be overwhelmingly controlled and run by a
foreigner or foreign controlled corporation owning or controlling at least sixty
percent (60%) of the capital and subscribed stocks, while petitioners X and Y
as Filipino citizens hold only the rest of forty percent; a wanton violation of
Section 2, Article X of the Philippine Constitution. In view of the foregoing, the
issue related to the alleged wanton violation of Section 2, Article XII of the
 Philippine Constitution has been heard. Therefore, all things considered, the
Petition for Dissolution affirmed.
5. Involuntary dissolution by the expiration of its term
 Coffee Folk Corporation is a stock corporation that was registered with the
Commission under SEC Registration No. 1234 on December 20, 2000. Under
its existing articles of incorporation, Coffee Folk’s term of existence is for fifty
(50) years from its incorporation – that is, until on 20 December 2050. Without
amending its Articles of Incorporation, the corporation’s life is deemed
dissolve after December 20, 2050.

2. Enumerate the steps of Liquidation.

1. Voluntary or involuntary dissolution

2. Direct petition for liquidation
3. The Court that has jurisdiction over the liquidation proceedings shall issue a
Liquidation Order
4. Winding up the affairs of the corporation
5. Collection of all that is due the corporation
6. The settlement and adjustment of claims against the corporation
7. The payment of its debts
8. Upon the expiration of the three-year winding-up period the corporation
ceases to exist for all purposes.
9. Liquidating dividends shall be distributed after the corporation is dissolved and
all its creditors have been paid.

3. What is the Tender Offer Rule?

 Tender offer means a publicly announced intention by a person acting alone

or in concert with other persons to acquire equity securities of a public
company. It is sometimes called “take-over bids.”
 A tender offer is an offer by the acquiring person to stockholders of a public
company for them to tender their shares therein on the terms specified in the
offer. Tender offer is in place to protect minority shareholders against any
scheme that dilutes the share value of their investments. It gives the minority
shareholders the chance to exit the company under reasonable terms, giving
them the opportunity to sell their shares at the same price as those of the
minority shareholders.
4. What are exempt securities and exempt transactions? Give an example for
each.

EXEMPT SECURITIES
These are financial instruments that do not need to be registered with the Securities
and Exchange Commission.
Example:
Any security issued or guaranteed by the Government of the Philippines,
or by any political subdivision or agency thereof, or by any person
controlled or supervised by, and acting as an instrumentality of said
Government.

EXEMPT TRANSACTIONS
It is a type of securities transaction where a business does not need to file
registration with any regulatory body.
Example:
An isolated transaction in which any security is sold, offered for sale,
subscription or delivery by the owner thereof, or by his representative for
the owner’s account, such sale or offer for sale, subscription or delivery
not being made in the course of repeated and successive transactions of
a like character by such owner, or on his account by such representative
and such owner or representative not being the underwriter of such
security.

5. Why is the Securities Regulation Code called a "truth in securities law"?

 The Securities Regulation Code is called a “truth in securities law”

because it requires the issuer to make full and fair disclosure of
information about securities being sold or offered to be sold within the
Philippines and penalizes manipulative and fraudulent acts, devices
and schemes.