Test to determine Intra-corporate controversies

1. Relationship test if the parties are part of the same company,

i. Between stockholders(?)
ii. Stockholders and members vs corporation
iii. Corporation vs. state only in the aspect of the its franchise
Pascual case
No corporate relation where a corporate officer holds in trust for anoter his
corporate interest.
2. Nature of controversy test - Controversies relative to the running of the
corporation
Remember!
1. The jurisdiction of RTC and SEC
2. What are the regulations relative to fraudulent practices
3. Know about the way SRC tries to protect the public through rules on tender
offer, margin trading and other manipulative scheme
Securirites in General
1. Debt instruments
a. Bonds
i. issued by govt and other public corporation
ii. Evidences of indebtedness in the nature of PN
iii. Accompanied by mortgage
iv. Sold to general public
v. Expansion projects
vi. Long term
b. Debentures same
i. Not secured
ii. Issued on the basis of credibility of the debtor
iii. Short term
iv. Sold to interested inestors
2. Equity instruments
3. Investment instrument is a contract whereby a person invests his money in
a common enterprise and is led to expect profits primarily from the effort of
others.
a. Investment contract, (fractional undivided interests in oil, gas or other
mineral rights developer would lease a certain portion of lan for
mining and operation oil and the owner gets percentage or royalty
interest which land owner transfers to banks as collaterals.)
i. Howey test - howey is an American who is able to amass
wealth. To determine if it is an investment contract
1. Investment of money
 2. In a common enterprise is deemed created when two or
more investors pool their resources, even if the promoter
receives nothing but the brokers commission.
3. With the expectation of profits
4. And primarily from the efforts of others
(powerhomes limited vs. SEC)
4. Derivatives - forward, futures contract, options and warrants
a. A financial insturment whose value changes in responst to the change
in a specified interest rate, secutiy price, commodity price or
underlying.
b. With respect to equity securities, a
c. Options are ontracts that give the buyer the right, but not the
obligation, to buy or sell an underlying secureity at a predetermined
price, called the strike price
d. Warrants right to subscribe or purchase new shares or existing shares
in a company on or obefire a pre-determined date called the expirey
date
e. Terms to remember
i. Strike price
ii. Expiry date
iii. Straddle involves the purchase of an equal number fput otions
and call options on the same underlying security at the same
strike price and maturity date.
iv. Block sale shall mean a matched trade that does not go
through the automated order matching system of an Exchange
trading system but instead had been pre-arranged by and
among the Broker Dealers clients and is then entered as a done
deal directly into the trading system.
v. Options high price, longest term 2-3 years, offered at a price
lower than a stock op
vi. Warrants issued by the company itself, this a way for the
company to raise money, usually offered at aprice lower than a
stock option,can last up to 15 years
vii. Subscription warrant - same with covered but only applies to
new issues.
viii. Covered warrant the right to puchaes pr-determined number of
issued or existing shares in the future
5. Trust instruments -
6. Catch-all