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
When is a contract between two corporations having interlocking directors subject to stricter scrutiny? Generally, a contract between two or more corporations with interlocking directors will not be invalidated solely on that ground, provided there is no fraud and the contract is fair and reasonable (SEC. 32, Revised Corporation Code of the Philippines). However, the
When must a management contract be approved by a two-thirds (2/3) vote of the managed corporation’s stockholders? A management contract requires approval by the stockholders of the managed corporation owning at least two-thirds (2/3) of the total outstanding capital stock entitled to vote under two specific scenarios (SEC. 43, Revised Corporation Code of the Philippines).
Under what conditions may a director who acquired a corporate business opportunity avoid having to refund the profits? A director who acquires a business opportunity that rightfully belonged to the corporation, thereby obtaining profits to the prejudice of the corporation, must generally account for and refund all such profits (SEC. 33, Revised Corporation Code of
What are the rules concerning the adoption and filing requirements for corporate bylaws? For the adoption of bylaws, the affirmative vote of the stockholders representing at least a majority of the outstanding capital stock is necessary (SEC. 45, Revised Corporation Code of the Philippines). The bylaws must be signed by the voting stockholders or members
What are the rules concerning the adoption and filing requirements for corporate bylaws? Read More »
What are the mandatory composition and specific restrictions placed upon the powers of an Executive Committee? The board may create an executive committee if authorized by the bylaws, and this committee must be composed of at least three (3) directors (SEC. 34, Revised Corporation Code of the Philippines). The committee may act on specific matters
What is the restriction on donations made by foreign corporations in the Philippines? Every corporation has the general power and capacity to make reasonable donations for the public welfare or for charitable, scientific, civic, or similar purposes (SEC. 35, Revised Corporation Code of the Philippines). However, this power is explicitly restricted for foreign corporations doing
What is the restriction on donations made by foreign corporations in the Philippines? Read More »
