LACAYANGA, LIAM LAURENCE D.

CORPORATION LAW ASSIGNMENT

1. Submit in a table form the kinds of meetings, the prescribed

quorum and prescribed vote.

REGULAR SPECIAL
WHEN HELD Any time deemed Annually on a date
necessary or as fixed by the by-
provided in the by- laws.
laws
If not fixed, on any
date after April 15
of every year as
determined by the
Board
REQUIREMENT OF GR: At least one- GR: Sent at least 21
WRITTEN NOTICE week written days prior to the
notice. meeting.

XPN: A different XPN: A different

period is provided period is required
in the by-laws or by the by-laws, law
regulation or regulation.

Written notice may

be sent to all
stockholders or
members of record
through electronic
mail or such other
manner as the SEC
shall allow.
QUOROM GR: Stockholders GR: Stockholders
representing representing
majority of the majority of the
 outstanding outstanding
capital stock or capital stock or
majority of the majority of the
members. members.

XPN: The Code or XPN: The Code or

the by-laws the by-laws
provide otherwise. provide otherwise.
[Sec. 51] [Sec. 51]

2. Enumerate meetings that require a higher quorum requirement.

The following meetings require a higher quorum requirement:

a.
3. Explain and illustrate secured creditors and administrators right
to vote in a meeting.

General Rule: In case a stockholder grants security interest in his

or her shares in stock corporations, the stockholder-grantor shall
have the right to attend and vote at meetings of stockholders.

Exception: Secured Creditor is expressly given by the

stockholder-grantor such right in writing which is recorded in the
appropriate corporate books. (Sec. 54)

Executors, administrators, receivers, and other legal

representatives duly appointed by the court may attend and
vote in behalf of the stockholders or members without need of
any written proxy. (Sec. 54)

4. In Batangas Laguna Tayabas Bus Co. V. Bitanga et al (2001),

explain the shareholder’s right to vote if share is under litigation.

In BLTBC vs Bitanga et al, it held that the purpose of registration,

therefore, is two-fold:
 a. To enable the transferee to exercise all the rights of a
stockholder, including the right to vote and to be voted for,
and to inform the corporation of any change in share
ownership so that it can ascertain the persons entitled to the
rights and subject to the liabilities of a stockholder. Until
challenged in a proper proceeding, a stockholder of record
has a right to participate in any meeting; his vote can be
properly counted to determine whether a stockholders’
resolution was approved, despite the claim of the alleged
transferee.

b. On the other hand, a person who has purchased stock, and

who desires to be recognized as a stockholder for the purpose
of voting, must secure such a standing by having the transfer
recorded on the corporate books. Until the transfer is
registered, the transferee is not a stockholder but an outsider.

5. Explain voting in cases of:

SHARE IN MANNER OF VOTING

A. Joint Ownership GR: Consent of all the co-
owners is necessary

XPN:
a. Written Proxy signed
by all the co-owners
authorizing one or
some of them or any
third person to vote.
b. If shares are owned in
an “and/or” capacity,
any co-owner can
vote or appoint a
proxy.
 B. Treasury Shares No voting right as long as
such shares remain in the
treasury
C. Proxies A proxy can vote as a
shareholder when so
authorized by the
shareholder. Proxy is an
agent of the shareholder
authorized to vote.

XPN. – Right to vote by

proxy is denied under the
Articles of Incorporation or
the By-laws.

6. Voting Trust vs. Proxy

Proxy vote refers to a temporary arrangement for a one-time

authority to vote. Voting Trust, on the other hand, gives the
Directors or Trustees increased power to make decisions on
behalf of all shareholders to control the company.

7. Subscription Contract vs. Pre-incorporation

Subscription contract is a contract for the acquisition of unissued

stock in an existing corporation or a corporation to be formed.
Pre-incorporation contracts, on the other hand, establish the
operations, management, and define who will have control prior
to the initial corporate meeting.

8. Consideration of Stocks

Stocks shall not be issued for a consideration less than the par or
issued price thereof. Consideration for the issuance of stock may
be:

a. Actual cash paid to the corporation;

b. Property, tangible or intangible, which must be:
i. Actually received corporation; and
ii. Necessary or convenient for its use and lawful purposes
iii. At a fair valuation equal to the par or issued value of the stock
issued;
c. Labor performed for or services actually rendered to the
corporation;
d. Previously incurred indebtedness of the corporation;
e. Amounts transferred from unrestricted retained earnings to
stated capital;
f. Outstanding shares exchanged for stocks in the event of
reclassification or conversion;
g. Shares of stock in another corporation; and/or
h. Other generally accepted form of consideration. [Sec. 61]

9. Watered Stocks

Watered Stocks are shares of stocks of a corporation which have

been issued at a price that greatly exceeds its true value. The
total worth is less than the value carried on the books of the
corporation.

Watered stocks include:

1. Those issued without consideration;
2. Issued for a consideration other than cash, the fair valuation
of which is less that its par or issued value;
3. Issued as stock dividend when there are no sufficient retained
earnings to justify it; and
4. Issued as fully paid when the corporation has received a lesser
sum of money than its par or issued value (discount share).

10. Rights of Shareholders

The following are the fundamental rights of the shareholders:

1. Direct or indirect participation in management [Sec. 6]
2. Voting rights [Sec. 6]
3. Right to remove directors [Sec. 27]
 4. Proprietary rights
(a) Right to dividends [Sec. 42 and 70]
(b) Appraisal rights [Sec. 80]
(c) Right to issuance of stock certificate for fully paid shares
[Sec. 63]
(d) Proportionate participation in the distribution of assets
in liquidation [Sec. 139]
(e) Right to transfer of stocks in corporate books [Sec. 62]
(f) Pre-emptive right [Sec. 38]
5. Right to inspect books and records [Sec. 73]
6. Right to be furnished with the most recent financial
statements/reports [Sec. 73]
7. Right to recover stocks unlawfully sold for delinquent payment
of subscription [Sec. 68]
8. Right to file individual suit, representative suit and derivative
suits

11. Individuals vs. Class Suit vs. Derivative Suit

An individual suit is A suit brought by the shareholder in his own

name against the corporation when a wrong is directly inflicted
against him

A class suit is A suit brought by the stockholder in behalf of himself

and all other stockholders similarly situated when a suit brought
by the shareholder in his own name against the corporation
when a wrong is directly inflicted against him or a wrong is
committed against a group of stockholders.

A derivative suit is A suit brought by a stockholder for and on

behalf of the corporation for its protection from the wrongful acts
committed by the directors/trustees of the corporation, when
the stockholder finds that he has no redress because the
directors/trustees, are the ones vested by law to decide whether
or not to sue.

12. Effect of Delinquency

Delinquency suspends all the rights of the subscriber except
the right to receive dividends but the dividends shall be
applied first to the unpaid balance on the subscription plus
costs and expenses.