Incorporation1. There should be 5 to 15 corporators in corporation2. A majority of incorporators should be citizens of the Philippines. 3. All Incorporators are corporators, and all incorporators are stockholders.

Incorporation4. A corporation could be an incorporator of another corporationA corporation could be a corporator of another corporationA. True; TrueB. True; FalseC. False; TrueD. False; False

Corporate Term5. A corporation may exist for a period not exceeding ____ years unless extended.

6. True or False. A corporation's life may be extended by amending the articles of incorporation at any time before the expiration of the term.

Corporate TermAmendments to Articles of Incorporation (Hint: 50.67)

7. A corporation has 10 directors and 20 shares outstanding. How many directors and shares are needed to pass an amendment?

//Effectivity

Commencement of ExistenceComplete the following sentence:8. A corporation gains juridical personality from the date of _________________________________(Hint: Certificate)

A Corporation attains juridical personality from the date of isssuance of the certificate of

incorporation

Corporate Name9. Realizing the opportunity for easy popularity, the stockholders of a new corporation named its corporation SGV corporation. It contends that the name is valid since no corporation is named SGV (The audit firm SGV&Co is a partnership). Is the contention Valid? (Yes or No)

Corporate Name• Sec. 18. Corporate name. - No corporate name may be

allowed by the Securities and Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing laws. When a change in the corporate name is approved, the Commission shall issue an amended certificate of incorporation under the amended name.

De Facto CorporationRequisities of a de facto corporationA. There must be a valid law under which a corporation might incorporateB. There is an attempt in good faith to incorporateC. Actual exercise of corporate powersD. Issuance of certificate of incorporation despite non-compliance with some legal requirements.

De Facto CorporationA, B, C, D and E, with mere agreement, proclaimed themselves as a corporation and started to transact business as "Z Corporation". 10. Is Z corporation a de facto corporation?

De Facto CorporationA, B, C, D and E filed on June 1, 2006 Articles of Incorporation of S'acto corporation with the SEC. Only 20% of the shares were subscribed but SEC issued a certificate of incorporation due to oversight. The Corporation transacted business with X through credit sale. Later, the corporation sued X for payment. X counter-sued by questioning the validity of the identity of the corporation.

Recitation Question: Is S’acto Corporation a De Facto Corporation11. Will X's suit prosper?

Aesthetics12. Pogi si Sir RalphWalang mas pogi pa kay Sir RalphA. True; TrueB. True; TrueC. True; TrueD. True; True

Corporation by Estoppel13. A, B, C, D and E, with mere agreement, proclaimed themselves as a corporation and started to transact business as "Z Corporation". They transacted business and purchased merchandise on account from Y. Later, Y sued Z Corporation for payment. A and Company contends that Y cannot sue Z Corporation because there is no such valid corporation. Will A and Company escape liability?

Corporation by Estoppel• Sec. 21. Corporation by estoppel. - All persons who assume to

act as a corporation knowing it to be without authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a result thereof: Provided, however, That when any such ostensible corporation is sued on any transaction entered by it as a corporation or on any tort committed by it as such, it shall not be allowed to use as a defense its lack of corporate personality.

Corporation by Estoppel14. A, B, C, D and E, with mere agreement, proclaimed themselves as a corporation and started to transact business as "Z Corporation". They transacted business and sold merchandise on account to Y. Later, Z sued Y for payment. Y contends Z Corporation has no right against him since Z does not have a corporate identity. Will Y escape liability?

Corporation by Estoppel

Sec. 21 Continued…On who assumes an obligation to an ostensible corporation as such, cannot resist performance thereof on the ground that there was in fact no corporation.

Inoperation15. If a corporation fails to commence business from two(2) years from date lf its incorporation, there shall be automatic dissolutionIf a corporation, after commencing business, subsequently becomes continuously inoperative for a period of five (5) years, there shall be automatic dissolution.A. True; TrueB. True; FalseC. False; TrueD. False; False

The Board of Directors/Trustees16. Identify: They are those with sole authority to determine policy and conduct the ordinary business of the corporation.17. True or False. A director must always be a stockholder, and a trustee must always be a member.18. True or False. A director shall hold office for three (3) years and until their successors are elected or qualified19. Yes or No. Mr. Ralpogi, a director of X corporation, signed a contract on behalf of X Corporation to be the sole supplier of goods of Y corporation for the next several years. Is the contract binding upon the corporation?

Voting20. A owns 100 shares. The number of directors to be voted on are 5. If he wishes to vote for 5 candidates equally, how many votes can he give to each of the 5 candidates?

21. Refer to number 49. If A wishes to vote for one candidate only, how many votes can he give that candidate?

Voting Requirements - BOD meeting

22. The BOD of X corporation is composed of 10 members. The articles of incorporation prescribe that there must be at least 7 to constitute a quorum. In a certain meeting, 8 of them was present. how many votes are needed in order to bind the corporation in a contract?

23. Suppose the decision was to elect the officers of the corporation. How many votes are needed?

Removal of director

24. True or False. A director may be removed by 2/3 of Outstanding Capital Stock even without just cause.

Vacancies

25. X Corp has a BOD of 10 directors. Five of them died in an accident. Who will vote to fill the vacancy?

26. Y Corp has a BOD of 10 directors. 2 of the directors died. Of the 8 remaining, 6 of them attended a meeting to vote on the vacancies. How many votes are need to fill them?

Liability of Directors

27. True or False. The directors of a corporation voted on an illegal act to be executed by the corporation. The directors will be liable solidarily to the corporation, stockholders and other persons.

Related Party Transaction - Director and Corporation

28. A corporation entered into a contract with a director. All of the following should exist for the contract to be voidable

A. Presence of such director was not necessary in the meeting for the contract.

B. Vote of such director not necessary for the approval of the contract.

C. Contract is fair an reasonable. D. If an officer, the officer was previously authorized by the BOD.

• *contract may be ratified by 2/3 of OSC if the defect is only A and/or B.

Related Party Transaction - Director and Corporation

29. An executive committee, composing of not less than three members of the BOD, may vote on matters delegated to it by the by-laws. However, they may not vote on the following, except-

A. to adopt a corporate sealB. approval of any action for which shareholders' approval is also

required; C. the filing of vacancies in the board; D. the amendment or repeal of by-laws or the adoption of new by-

laws; E. the amendment or repeal of any resolution of the board which

by its express terms is not so amendable or repealable; and F. a distribution of cash dividends to the shareholders.

For RecitationExpress PowersImplied PowersIncidental Powers

Question: What’s the best way to Review for the CPA Board?

Answer:

30. A corporation has Ordinary Capital of P100,000 and APIC of P200,000. What is the maximum amount of surplus profit that the corporation will retain?

31. These are acts done by the corporation that are not within its express, implied or incidental powers.