What are the consequences if a corporation fails to formally organize and commence business? If a corporation fails to formally organize and commence its business within five (5) years from the date of its incorporation, its certificate of incorporation is automatically deemed revoked (SEC. 21, Revised Corporation Code of the Philippines). This revocation takes effect […]
What procedure is followed if a corporation commences business but becomes continuously inoperative? If a corporation has commenced its business but subsequently becomes inoperative for a period of at least five (5) consecutive years, the SEC may place it under delinquent status after due notice and hearing (SEC. 21, Revised Corporation Code of the Philippines).
What are the fundamental roles and responsibilities of the board of directors or trustees? The board of directors or trustees is vested with the power to exercise the corporate powers, which are the fundamental legal capabilities of the entity (SEC. 22, Revised Corporation Code of the Philippines). The board is also responsible for conducting all
What are the term lengths and qualification requirements for directors and trustees? Directors in a stock corporation are elected for a fixed term of one (1) year and must be holders of stocks registered in the corporation’s books (SEC. 22, Revised Corporation Code of the Philippines). Trustees in a nonstock corporation are elected for a
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What is the distinction between a corporator and an incorporator? Corporators are generally defined as all individuals who compose a corporation, whether they hold shares in a stock corporation or are merely members in a nonstock corporation (SEC. 5, Revised Corporation Code of the Philippines). Incorporators, however, are a specific subset of corporators. They are
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What fundamental right must always be retained by at least one class of shares? While certain shares, such as preferred or redeemable shares, may be deprived of voting rights, the Code mandates that there shall always be a class or series of shares with complete voting rights (SEC. 6, Revised Corporation Code of the Philippines).
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On which fundamental corporate matters must nonvoting shares be entitled to vote? Holders of nonvoting shares are granted the statutory right to vote on several fundamental corporate matters crucial to their economic interests (SEC. 6, Revised Corporation Code of the Philippines). These include the amendment of the articles of incorporation and the adoption or amendment
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Which specific financial corporations are prohibited from issuing no-par value shares? The issuance of no-par value shares is strictly prohibited for several types of financial and public interest corporations (SEC. 6, Revised Corporation Code of the Philippines). Specifically, banks, trust, insurance, and preneed companies, along with public utilities and building and loan associations, cannot issue
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What is the minimum consideration and accounting treatment for no-par value shares? No-par value shares must be issued for a consideration of at least Five pesos (P5.00) per share (SEC. 6, Revised Corporation Code of the Philippines). This minimum consideration serves as a statutory floor for their issuance price. Crucially, the entire consideration received by
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What limitations are imposed on the exclusive voting rights granted to Founders’ Shares? The exclusive right granted to Founders’ Shares, allowing holders to vote and be voted for in the election of directors, is subject to a strict time limitation (SEC. 7, Revised Corporation Code of the Philippines). This exclusive right cannot exceed a period
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