What rights must be protected when a corporation seeks approval to decrease its capital stock? Before approving a capital stock decrease, the SEC must ensure that its effect shall not prejudice the rights of corporate creditors (SEC. 37, Revised Corporation Code of the Philippines). This safeguard prioritizes the claims of external creditors over the interests […]
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
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What is the liability of persons who act as a corporation without proper authority? All persons who assume to act as a corporation knowing they lack the authority to do so shall be liable as general partners for any resulting debts, liabilities, and damages incurred (SEC. 20, Revised Corporation Code of the Philippines). This imposition
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Who are the mandatory officers required for a corporation, and what restrictions apply to holding multiple offices? Immediately after their election, the directors must formally organize and elect a president, who is required to be a director (SEC. 24, Revised Corporation Code of the Philippines). They must also elect a treasurer, who must be a
