CORPO LOVE NOTES PART 2

4.2.10 Corporate Reorganization

4.2.10.1 Merger (M)
- 2 or more corporations merge into a single corporation
which shall be one of the constituent corporations (now
the surviving corporation).

A+B = B or A; A+B+C = A or B or C

4.2.10.2 Consolidation (C)

- 2 or more corporations consolidate into a new single
corporation which shall be the consolidated corporation.

A+B = C; A+B+C = X

A. Both must have a Merger or Consolidation Plan

- Must be approved by the board (Majority Vote)
- Must set forth the following:
1. Names of the constituent corporations.
2. Terms and the mode of carrying it to effect.
3. Statement of changes in the AoI.
4. Such other provisions deemed necessary.
- Must be also approved by 2/3 votes of
stockholders/members.
- Same requirements for amendments (Majority and 2/3)
- Contents of AoM/C (pls see sec. 77)
- M/C is effective from the issuance of certificate of M/C
by the SEC.
- M/C of Financial intermediaries shall have a favorable
recommendation from appropriate government agencies.

B. Effects of M/C
1. Separate existence of constituent corporations shall
cease except the surviving corporation.
 2. Surviving or consolidated corporation shall possess all
the rights, privileges, and powers; and shall be subject to
all the duties and liabilities of the constituent
corporations.

4.2.11 Non-stock Corporation

Essential Characteristics
- Does not have shares of stocks
- No part of its income is distributable as dividends
- Main purpose is not for profit (charity, educational,
livelihood, medical, etc.)
- Any profit obtained shall be used for the
furtherance of the purpose for which it was
organized.

4.2.12 Modes of Dissolution and Liquidation

1. Voluntary
a. Where no creditors are affected
b. Where creditors are affected
2.Involuntary

1. a. Voluntary, no creditors
- Effected by Majority vote of the Board AND approval of
Majority of the Stockholders/Members.
- At least 20 days notice prior to the meeting
- Notice shall also be published once prior to the meeting
in a newspaper of local or general circulation.
- A verified request for dissolution shall be submitted to
SEC (see sec. 134)
- The Corp. shall submit:
1. A certified copy of the resolution authorizing
dissolution.
2. Proof of publication.
 3. Favorable recommendation from the AGA if
necessary. (Financial intermediaries)
- SEC shall approve within 15 days if there is no request
to withdraw.

1.b. Voluntary, with creditors

- Effected by filing a petition for dissolution in the SEC.
- Petition must be signed by Majority of the Board AND
approved by 2/3 votes of the stockholders/members.
- Petition shall state:
- Reason for dissolution
- Form, manner, and time when notices were given
- Date, place, time of meeting when vote was made
-A certified copy of the resolution authorizing dissolution
and a list of all its creditors must also be submitted to the
SEC.
- SEC shall issue an order fixing the deadline for filing an
opposition/objection to the position (30 to 60 days from
entry).
- The order shall be published once a week for 3
consecutive weeks in a newspaper of local or general
circulation
- Copy of the order must also be posted for 3 consecutive
weeks in 3 public places in the City or Municipality.
- SEC shall hear the petition after 5 days from expiration
of the period fixed.
- Dissolution will take effect upon the issuance of the
certificate by the SEC.

1.c. Dissolution by shortening of corporate term.

- Effected by amendment of the AoI
- Corp. is dissolved after expiration of the fixed term.
- No need for the issuance of certificate of dissolution.
2. Involuntary Dissolution
- Can be mutu proprio or upon filing of a verified
complaint.
- Grounds for dissolution:
1. Non-use of Corp. charter (5 years)
2. Continuous Inoperation (5 years)
3. Lawful court order to dissolve
4. Final judgment of incorporation through fraud
5. Final judgment that the corp.:
a. Created for the purpose of committing
crimes.
b. Aided in the commission of crimes.
c. Repeatedly and knowingly tolerated crime
by its D/T,O, or E.
- Once dissolved due to the aforementioned grounds,
remaining properties shall be forfeited to the National
government.

3. Corporate Liquidation
- 3 years to wind-up affairs after dissolution (except
banks)

4.2.13 Foreign Corporations – Formed, organized, or existing

under laws other than the Philippines and whose laws allow
Filipino citizens and corporations to do business in its own
country or state.
A. License to do business
Purpose - gives right to transact business
B. Requirements for application
1. Certified copies of AoI and B-L
2. Translation (Eng. Or Fil.) of the AoI and B-L
3. Application under oath and set forth (see sec.
142)
 4. Certificate under oath that Filipinos are allowed to
do business in their country or state.
5. Statement under oath that the applicant is solvent
and sound financial condition.
6. It must have a resident agent.

C. Consequence of doing business without a license

- Shall not be permitted to maintain or intervene in
any action, suit or proceeding in any court or admin.
agency in the Philippines.
D. Rights of a foreign corporation
1. Transact business in the Philippines after
obtaining a license and authority from the
government.
2. To sue and be sued, except if it did not obtain a
license.
E. Grounds for revocation/suspension of license
- (See sec. 151)
4.2.14 Kinds and availability of corporate books.
-Old Law
1. Record of all business transactions (Books of accounts)
2. Minutes of all meetings of directors and trustees
3. Minutes of all meetings of stockholders or members
4. Stock and transfer books.
- RCC
(see sec. 73).
- Must be kept at its principal office
- Open to inspection by any D,T,S,M
- At reasonable hours on business days
- Demand in writing must be made for copies at their
expense. (unjust refusal shall be reported to the SEC)
- Right to inspect must not be abused
 - Right is also subject to the provisions of the SRC, Data
Privacy Act, IPC.

Right to financial statements

- Shall be given to the stockholders upon written request
within 10 days.
- FS shall be duly certified by a CPA except if the total
assets or liabilities is less than 600,000 - Certification
under oath may be made by the treasurer and president.