When is a sale or disposition of corporate assets considered to cover “substantially all” of the corporate property? A sale or other disposition is deemed to cover substantially all the corporate property and assets if, by that action, the corporation would be rendered incapable of continuing the business or accomplishing the purpose for which it […]
What right is accorded to a stockholder who dissents from the sale or disposition of substantially all corporate assets? A stockholder who dissents from the resolution approving the sale or disposition of substantially all corporate assets is granted the right of appraisal (SEC. 39, Revised Corporation Code of the Philippines). This allows the dissenting stockholder
What financial requirement must be met before a stock corporation can acquire its own shares (other than redeemable shares)? A stock corporation has the power to purchase or acquire its own shares for a legitimate corporate purpose, provided that the corporation has unrestricted retained earnings in its books to cover the shares to be purchased
When is stockholder approval not necessary for a corporation to invest its funds in another business? Generally, a private corporation must obtain approval from a majority of the board and ratification by two-thirds (2/3) of the outstanding capital stock before investing funds in another business or for any purpose other than its primary purpose (SEC.
From what source must the board of directors declare dividends, and in what forms may they be paid? The board of directors of a stock corporation is authorized to declare dividends only out of the unrestricted retained earnings of the corporation (SEC. 42, Revised Corporation Code of the Philippines). Dividends may be made payable in
When is a contract between a corporation and its director, officer, or relative considered voidable? A contract between the corporation and one or more of its directors, trustees, officers, or their spouses and relatives within the fourth civil degree of consanguinity or affinity is generally considered voidable, at the option of the corporation (SEC. 31,
What is the rule concerning the retention of surplus profits by stock corporations? Stock corporations are generally prohibited from retaining surplus profits in excess of one hundred percent (100%) of their paid-in capital stock (SEC. 42, Revised Corporation Code of the Philippines). This rule, known as the “improperly accumulated earnings tax” principle, encourages the distribution
What is the rule concerning the retention of surplus profits by stock corporations? Read More »
How can a voidable contract with an interested director be ratified if quorum or voting conditions were absent? If any of the first three validating conditions (quorum, voting, or fairness) are absent in a contract involving a director or trustee, the contract may still be ratified by the stockholders (SEC. 31, Revised Corporation Code of
What are the general voting requirements for a corporation to enter into a management contract with another corporation? A corporation cannot conclude a management contract with another corporation unless the contract is approved by the board of directors and by stockholders owning at least the majority of the outstanding capital stock of both the managing
What is the deadline and content requirement for reporting the election of corporate officers and directors to the SEC? Within thirty (30) days after the election of directors, trustees, and officers, the corporate secretary or another authorized officer must submit a report to the SEC (SEC. 25, Revised Corporation Code of the Philippines). This report
