Legal Answers

Brief Answers to Specific Questions about Philippine Law

What are the functions and how is an emergency board to fill a vacancy constituted?

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What are the functions and how is an emergency board to fill a vacancy constituted? An emergency board may be temporarily formed when a vacancy prevents the remaining directors from constituting a quorum, and critically, emergency action is required to prevent grave, substantial, and irreparable loss or damage to the corporation (SEC. 28, Revised Corporation […]

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What is the limit on the total yearly compensation for directors or trustees?

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What is the limit on the total yearly compensation for directors or trustees? In the absence of a provision in the bylaws fixing their compensation, directors or trustees shall not receive any compensation in their capacity as such, except for reasonable per diems (SEC. 29, Revised Corporation Code of the Philippines). However, stockholders representing a

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Under what conditions are directors, trustees, or officers liable jointly and severally for damages?

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Under what conditions are directors, trustees, or officers liable jointly and severally for damages? Directors or trustees are held jointly and severally liable for all resulting damages if they willfully and knowingly vote for or assent to patently unlawful acts of the corporation (SEC. 30, Revised Corporation Code of the Philippines). Liability also arises if

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What happens if a director or officer acquires an interest adverse to the corporation in a confidential matter?

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What happens if a director or officer acquires an interest adverse to the corporation in a confidential matter? A director, trustee, or officer is strictly prohibited from attempting to acquire, or actually acquiring, any interest adverse to the corporation in respect of any matter that was reposed in them in confidence (SEC. 30, Revised Corporation

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How are treasury shares defined, and how may they be subsequently disposed of?

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How are treasury shares defined, and how may they be subsequently disposed of? Treasury shares are defined as shares of stock that have been previously issued and fully paid for, but which the issuing corporation subsequently reacquires (SEC. 9, Revised Corporation Code of the Philippines). This reacquisition can occur through various lawful means, such as

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What is the role and required percentage of independent directors in corporations vested with public interest?

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What is the role and required percentage of independent directors in corporations vested with public interest? Corporations deemed vested with public interest must have independent directors constituting at least twenty percent (20%) of their board (SEC. 22, Revised Corporation Code of the Philippines). An independent director is defined as a person who is free from

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What are the requirements for natural persons organizing a corporation regarding their number and qualifications?

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What are the requirements for natural persons organizing a corporation regarding their number and qualifications? A corporation may be organized by any person, partnership, association, or corporation, provided the total number of incorporators is not more than fifteen (15) (SEC. 10, Revised Corporation Code of the Philippines). If the incorporators are natural persons, they must

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What percentage of stock or membership is required to constitute a quorum for the election of directors or trustees?

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What percentage of stock or membership is required to constitute a quorum for the election of directors or trustees? For the election of directors or trustees, there must be present, either in person or through a written proxy, the owners of a majority of the outstanding capital stock (SEC. 23, Revised Corporation Code of the

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What is the term of existence for corporations formed prior to the effectivity of this Code?

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What is the term of existence for corporations formed prior to the effectivity of this Code? Corporations with certificates of incorporation issued prior to the Revised Corporation Code’s effectivity, and which continue to exist, are granted perpetual existence by default (SEC. 11, Revised Corporation Code of the Philippines). These existing corporations are given a choice,

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Describe the cumulative voting rights available to stockholders in stock corporations.

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Describe the cumulative voting rights available to stockholders in stock corporations. In stock corporations, stockholders entitled to vote possess the right to vote the number of shares standing in their own names in the stock books at the time of the election (SEC. 23, Revised Corporation Code of the Philippines). They have three options for

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