Vacancies in the Office of Director or Trustee; Emergency Board......... 88 Compensation of Directors or Trustees ..................................................... 90 Liabilities of Directors, Trustees, or Officers ............................................ 91 Dealings of Directors, Trustees, or Officers with the Corporation........ 92 Contracts Between Corporations with Interlocking Directors............... 93 Disloyalty of a Director ................................................................................ 93 Executive Management and Other Special Committees......................... 95 Lesson 2.2: POWERS OF CORPORATIONS Corporate Powers and Capacities............................................................... 97 Power to Extend or Shorten Corporate Term ............................................ 98 Power to Increase or Decrease Capital Stock; Incur, Create, or Increase Bonded Indebtedness............................................................... 98 Power to Acquire Own Shares.................................................................... 101 Power to Invest Corporate Funds in Another Corporation or Business or for Any Other Purpose ...........................................................102 Power to Declare Dividends........................................................................ 103 Power to Enter into Management Contract............................................... 106 Ultra Vires Acts of the Corporations ..........................................................107 Lesson 3.1: BYLAWS Adoption of Bylaws ......................................................................................109 Lesson 3.2: MEETINGS Regular and Special Meetings of Stockholders or Members.................. 113 Regular and Special Meetings of Directors or Trustees; Quorum......... 116 Person in Charge of Presiding the Meetings ...........................................117 Right to Attend and Vote in Meetings ....................................................... 117 Manner of Voting; Proxies........................................................................... 118 CHAPTER 2: RIGHTS OF STOCKHOLDER, MERGER, AND APPRAISAL RIGHT LESSON 1: Lesson 1.1: STOCKS AND STOCKHOLDERS Subscription Contract................................................................................... 127 Consideration for Stocks .............................................................................. 129 Certificate of Stock and Transfer of Shares ............................................... 129 Issuance of Stock Certificates...................................................................... 131 LESSON 3: v Its Qualifications and Terms ...................................................................... 81 Disqualification of Directors, Trustees, or Officers ................................. 82 Election of Directors or Trustees ............................................................... 84 Corporate Officers ....................................................................................... 85 Report of Election of Directors, Trustees, and Officers; Non-holding of Election and Cessation from Office .............................. 87 Removal of Directors or Trustees .............................................................. 87 Classes of Corporations ............................................................................... 64 Corporators, Incorporators, Stockholders, and Members ....................... 64 Classification of Shares ................................................................................ 65 Doctrine of Equality of Shares .................................................................... 67 Other Kinds of Stocks/Shares ..................................................................... 68 Doctrine of Piercing the Veil of Corporate Entity .................................... 68 Lesson 1.2: INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATIONS Number and Qualifications of Incorporators ........................................... 70 Terms of Corporate Existence ..................................................................... 72 Capital Stock Requirements ....................................................................... 72 Contents of the Articles of Incorporation.................................................. 73 Amendment of Articles of Incorporation.................................................. 74 Grounds When Articles of Incorporation or Amendment May Be Disapproved .................................................................................... 75 Corporate Name ........................................................................................... 76 Registration, Incorporation, and Commencement of Corporate Existence ..................................................................................... 77 Effects of Non-use of Corporate Charter and Continuous Inoperation .............................................................................. 78 LESSON 2: Lesson 2.1: BOARD OF DIRECTORS/TRUSTEES AND OFFICERS The Board of Directors or Trustees of a Corporation,
BUSINESS LAWS AND REGULATIONS
Liability of Directors for Watered Stocks ..................................................132 Delinquency Sale ..........................................................................................134 Effects of Delinquency ................................................................................. 136 Lost or Destroyed Certificates ....................................................................136 Lesson 1.2: CORPORATE BOOKS AND RECORDS Books to Be Kept; Stock Transfer Agent ....................................................142 Right to Financial Statements .....................................................................144 Lesson 2.1: MERGER AND CONSOLIDATION Plan of Merger or Consolidation ...............................................................145 Stockholders’ or Members’ Approval ........................................................ 146 Articles of Merger or Consolidation ..........................................................147 Effectivity of Merger or Consolidation ...................................................... 148 Effects of Merger or Consolidation ............................................................149 Lesson 2.2: APPRAISAL RIGHT When to Exercise Appraisal Right .............................................................151 CHAPTER 3: OTHER CLASSES OF CORPORATIONS, DISSOLUTION, AND POWERS OF SEC LESSON 1: NONSTOCK CORPORATION Purposes .................................................................................................................159 Right to Vote........................................................................................................... 160 Election and Term of Trustees .............................................................................160 Rules of Distribution of Assets ............................................................................ 161 Conversion from a Stock Corporation to a Nonstock Corporation ................ 162 LESSON 2: Lesson 2.1: CLOSE CORPORATIONS Articles of Incorporation.............................................................................. 164 Effects of Issuance or Transfer of Stocks in Breach of Qualifying Conditions ................................................................................. 164 Agreements by Stockholders.......................................................................165 When a Board Meeting is Unnecessary or Improperly Held .................166 Amendment of Articles of Incorporation.................................................. 166 Deadlocks....................................................................................................... 166 Withdrawal of Stockholder or Dissolution of Corporation..................... 167 LESSON 2.2: SPECIAL CORPORATIONS LESSON 2.2.1: EDUCATIONAL CORPORATIONS Board of Trustees .................................................................................168 LESSON 2.2.2: RELIGIOUS CORPORATIONS Corporation Sole................................................................................... 169 Articles of Incorporation ..................................................................... 169 Submission of the Articles of Incorporation ....................................170 Acquisition and Alienation of Property ...........................................170 Filling of Vacancies .............................................................................. 171 Dissolution ............................................................................................ 171 Religious Societies................................................................................171 LESSON 2.2.3: ONE-PERSON CORPORATION Minimum Capital Stock Not Required for One-person Corporation ..................................................................... 172 Articles of Incorporation ....................................................................172 Bylaws .................................................................................................... 173 Display of Corporate Name ................................................................ 173 Single Stockholder as Director and President.................................. 173 Nominee and Alternate Nominee .....................................................173 Treasurer, Corporate Secretary, and Other Officers .......................174 Minute Books, Records, and Reportorial Requirements ................ 175 LESSON 2:
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