Regulation

What is the final step for a merger or consolidation to become legally effective?

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What is the final step for a merger or consolidation to become legally effective? The articles of merger or consolidation, after being signed and certified by the constituent corporations, must be submitted to the SEC for its approval (SEC. 78, Revised Corporation Code of the Philippines). If the corporations involved are special corporations (such as […]

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What specific unlawful purposes are prohibited for entering into a voting trust agreement?

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What specific unlawful purposes are prohibited for entering into a voting trust agreement? No voting trust agreement shall be entered into for the purposes of circumventing the laws against anti-competitive agreements, abuse of dominant position, or anti-competitive mergers and acquisitions (SEC. 58, Revised Corporation Code of the Philippines). Furthermore, voting trusts are prohibited if their

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When is a contract between two corporations having interlocking directors subject to stricter scrutiny?

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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

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What rights must be protected when a corporation seeks approval to decrease its capital stock?

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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

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What action must the Securities and Exchange SEC take if an election is not held as scheduled due to unjustified reasons?

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What action must the Securities and Exchange SEC take if an election is not held as scheduled due to unjustified reasons? If a scheduled election is not held, the non-holding and the reasons must be reported to the SEC within thirty (30) days, specifying a new election date that is no later than sixty (60)

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Name two specific grounds upon which the SEC may disapprove the Articles of Incorporation.

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Name two specific grounds upon which the SEC may disapprove the Articles of Incorporation. One ground for disapproval is if the Articles of Incorporation or any amendment thereto is not substantially in accordance with the form prescribed in the Code (SEC. 16, Revised Corporation Code of the Philippines). Another critical ground is if the purpose

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Under what conditions is a corporate name considered not distinguishable from an existing name?

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Under what conditions is a corporate name considered not distinguishable from an existing name? A corporate name is considered not distinguishable if it contains generic additions such as the word “corporation”, “company”, “incorporated”, “limited”, “limited liability”, or an abbreviation of one of such words (SEC. 17, Revised Corporation Code of the Philippines). Similarly, a name

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Which specific financial corporations are prohibited from issuing no-par value shares?

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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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Under what condition may a corporation purchase its own redeemable shares despite the rule on retained earnings?

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Under what condition may a corporation purchase its own redeemable shares despite the rule on retained earnings? Redeemable shares are those which the corporation is authorized to purchase back from the holders upon the expiration of a fixed period (SEC. 8, Revised Corporation Code of the Philippines). Uniquely, this purchase may occur regardless of the

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How are corporations created by special laws governed, relative to the Code?

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How are corporations created by special laws governed, relative to the Code? Corporations established by special laws or specific charters are primarily governed by the unique provisions contained within that special law or charter (SEC. 4, Revised Corporation Code of the Philippines). The Revised Corporation Code then serves a supplemental function to these primary provisions.

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