CHAPTER-II.pdf

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Adamson University*
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LAW 100
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Feb 10, 2024
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CHAPTER Il INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATIONS Number and Qualifications of Incorporators Incorporators are those stockholders or members mentioned in the articles of incorporation as originally forming and composing the corporation and who are signatories thereof.! Under Section 102, the incorporators and their qualifications are: 1) Any person, partnership, association or coporation, singly or jointly with others 2) Not more than fiffeen (15) in number; q corporation with a single stockholder is considered a One Person Corporation 3) Incorporators who are natural persons must be of legal age 4) Each incorporator of a stock corporation must own or be a subscriber to at least one (1) share of the capital stfock. Natural persons who are licensed to practice o profession, partnerships or associations organized for the purpose of practicing a profession, shall not be allowed to organize as a corporation unless otherwise provided under special laws. 1Section 5. ZThe new law deleted the requirement of natural persons, the minimu™ number of five incorporators as well as Phiippine residency of the majoriy the incorporators.
COPORATION CODE 47 CHAPTERII INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATIONS 2006 Bar: What is the minimum and maximum number of incorporators required to incorporate a stock corporation? The minimum number is one (1), as in the case of one person corporation. Thus, for domestic corporations, it is a minimum of two (2) and the maximum is fifteen (15). 2006 Bar: Must all incorporators be residents of the Philippines2 The law does notimpaose any residency requirement. Corporate Term Under Section 113, a corporation shall have perpetual existence unlessits arficles of incorporation provide otherwise. Corporations with cerlificates of incorporation issued prior to the effectivity of this Code, and which continue fo exist, shall have perpetual existence, unless the corporation, upon a vote of its stockholders representing a majority of its outstanding capital stock, notifies the SEC* that it elects to retain its specific corporation term pursuant to its articles of incorporation. However, dissenting stockholders can exercise their appraisal right in case of any change in the corporate term under this section. A corporate term for a specific period may be extended or shortened by amending the articles of incorporation but no extension may be made earlier than three (3) years prior to the original or subsequent 3The old law fixed the term to 50 years only, and allowed revival of corporations whose tem had expired. Buti pa ang corporations, merong forever! "The Securities and Exchange Commission (SEC).
48 CORPORATION AND BASIC SECURITIES LAW 'fifi expiry date(s) unless there are justifiable reasons for an earlier extension. Extension of the corporate term shall take effect only on the day following the origing or subsequent expiry date(s). 2011 Bar: T Corp. has a corporate term of 20 years under its Articles of Incorporation or from June 1, 1980 to June 1, 2000. On June 1, 1991 it amended its Articles of Incorporation to extend its life by 15 years from June 1, 1980 to June 1, 2015. The SEC approved this amendment. On June 1, 2011, however, T Corp decided to shorten its term by 1 year or until June 1, 2014. Both the 1991 and 2011 amendments were approved by majority vote of its Board of Directors and ratified in a special meeting by its stockholders representing at least 2/3 of its outstanding capital stock. The SEC, however, disapproved the 2011 amendment on the ground that it cannot be made earlier than 5 years prior to the expiration date of the corporate term, which is June 1, 2014. Is this SEC disapproval corecte a) No, since the 5-year rule on amendment of corporate term applies only to extension, not to shortening, of term. b) Yes, any amendment affecting corporate term cannot be made earlier than 5 years prior to the corporation's expiration date. ¢) No, since a corporation can in fact have a corporate life of 50 years. d) Yes, the amendment to shorten corporate te.rm cannot be made earlier than 5 years prior fo the corporation's expiration date.
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