Question & AnswerQ&A (BATAS PAMBANSA BLG. 68)
A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.
Corporations may be stock or non-stock. Stock corporations have capital stock divided into shares and can distribute dividends to shareholders, while non-stock corporations do not distribute dividends and members are called members instead of stockholders.
Any number of natural persons not less than five (5) but not more than fifteen (15), all of legal age and a majority of whom are residents of the Philippines.
At least 25% of the authorized capital stock must be subscribed, and at least 25% of the subscription must be paid upon subscription. Paid-up capital must be at least Five Thousand Pesos (P5,000.00).
Founders' shares are shares classified as such in the articles of incorporation that may have special rights and privileges, including exclusive voting rights, but such exclusive voting rights must be limited to a period not to exceed five (5) years and approved by the Securities and Exchange Commission.
Grounds include non-compliance with prescribed form, patently unconstitutional or illegal corporate purposes, false treasurer's affidavit on capital stock, and failure to comply with Filipino ownership requirements.
Elections must have present or represented by proxy the owners of a majority of the outstanding capital stock or members entitled to vote. The election must be by ballot if requested and candidates with the highest votes are declared elected.
Directors or trustees must perform their duties in good faith and with due diligence; they are jointly and severally liable for damages caused by willful unlawful acts, gross negligence, or bad faith and must account for profits related to conflicts of interest or usurpation of corporate opportunities.
Amendments need majority vote of the board and approval by stockholders representing at least two-thirds (2/3) of outstanding capital stock or members if non-stock. The amendments must be filed with the SEC, which approves and certifies the amendments.
Stockholders who dissent from actions like amendments restricting rights, sale of corporate assets, or mergers may demand payment of the fair value of their shares by making a written demand within 30 days after the vote. Fair value is determined by agreement or appraisal by disinterested persons.