Subscription Agreement Requirements

1. acquire unissued shares at least 25% (which must be paid upfront or later)
2.

Trust fund doctrine covers SCS and extends to the assets of the corporation when it
is insolvent for creditors then later members pro rata depending on class as member
like preferred and common SH.

Requirements for registration

Unrestricted retain earnings (you can buy back shares contributed only from the
URE)
Increase and Decrease Capital Rules ( will not be allowed if it prejudices
creditors (SEC will not approve))
Subscribe Capital Stocks (paid in capital) is a fund to which the creditors may
look into and extends to the assets when insolvent.
Authorized Capital Stocks - you must subscribe at least 25%
The corporation can buy shares in the SCS using URE and becomes Treasury except
Redeemable Shares
Section 122

Reuquirements for registration of Corporation

1. Filed to the SEC
2. Signed by all of the incorporators
(All because that’s the only thing they do)
(Incorporators must be natural persons only (section 10)

Corporation exists as a juridical entity for Period of 3 years for winding up:
after that terminated. Board takes care of the liquidation. EXN: Liquidation takes
beyond the 3 years. they assign a Trustee or if the board doeS it, the board
becomes the trustee themselves.
To file action, it cannot sue in its name if beyond the period. only in the name of
Trustees.

Content: 1. Corporate Name

(cannot be confusingly similar with another) with either “Corp”/“Inc”:
the SEC has the power to command you to change if there is similar)
2. Purpose Clauses: specification for purpose otherwise Ultra Vires
Note: A corp invest into another business outside of its purpose maybe
allowed by approval of 2/3 of stockholders then SEC approval.
Board Directors could be anywhere
3. Minimum Capitalization

Subscription and Paid-Up Requirements (Sec. 13)

Grounds for Disapproval (Sec. 17): unlawful or unconstitutional: hitmen
Board of Directors and Share-holders for Amendment of Articles of Incorporation
By-Laws: internal rules of the corporation: must be reasonable to be valid
Submission of By-laws after submission of Articles of Incorp. requires majority
vote of shareholders and directors unlike Amendments 2/3
Amendment of by laws majority vote is required
AC vs By laws = AC prevails becuase its like a contract with the state
Directors are voted by stockholders and shall have at least 1 share
Requirements for Board of Directors
1. must own a share
2.
Reason for req of residence: for meeting purposes (convenience)
Cumulative Voting: used in election for directors. Any shareholder has the
number of votes base on his shares. 1 share = 1 vote, 100 shares = 100 votes x the
number of seats for election. This is provided by law.
One director cannot act independently but the law allows the forming of smaller
body such as executive committee which can do the board’s act except for certain
acts like changing the name of the corp cuz it needs approval, or amendment of by
laws or resolution. ( EXN Section 35 check)
Board of Trustees - refers to non-stock corporations
Can the Board make mistake? No. It’s an exercise of business judgment and is
binding to the corporation. Good faith. No one is perfect. A court cannot
interfere cannot substitute their judgment. Also the Regulatory Agencies cannot
interfere their business judgment.
Express or implied ratification of the corporation to the acts or decisions cannot
be held liable.
Vacancy in the Board. They can constitute a forum and elect for the vacancy.
In case of dispute in election will be subject to the jurisdiction of RTC special
commercial courts for election contest.
If not a case of expiration of the term like removal, stockholders shall be the one
elected to fill. The Board cannot vote to occupy.
SECTION 29 who has the power to fill vacancy
Resignation during the hold-over period(if not election), the stockholders shall be
elected. Directors cannot elect to fill.
Directors can be removed with or without cause. However cannot be exercise if it
has direct impact to the minority stockholders.
Meeting: needs Quorum = majority of all the board of directors
EXN:
Statutory officers of a corporation: Can bind the corp when acts within authority
1. president (must also be a member of the Directors)
2. Corporate secretary
3. Treasurer
Note: A general Manager has apparent authority
Why it is important to identify a corporate officer?
ANS: If there is removal of employee jurisdiction is to NLRC. If corporate
officer, it will be an intra- corporate dispute.
Note: You are a corporate officer if your position is specifically placed in the
By-Laws. (If the law provides or the By-Laws states such.)
Fiduciary Duties of Directors: 3-Fold Duties