Midterm WWW Compiled 2016- Atty. Espedido

7/24/2019 Midterm WWW Compiled 2016- Atty. Espedido

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OT S

CORPOR TION L W

(based on Atty. E. Espedidos

Discussions)

By: Batch Batang Sip-onon

Compiled WWWs of 3rd Year - LLB

(Pelaez Moot Court)Class

S.Y. 2015 2016

Compiled by:

Rheland Servacio

&

Dana Mae de Lira

As of February 4, 2016.


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If we have 10 million authorized capital stock dividedinto 10 Million shares. No par value was mentionedin the Articles of Incorporation.Q:, do we have a par value of 1 peso?A: No. what is being issued by the corporation is aNon Par Value Share.

Q: If we issue such NPV share, will that share haveany value?A: Yes, called the issued value as agreed by theissuing corporation and the subscriber,provided thatit will not be less than P5.00.

Voting and Nonvoting Shares.

Voting Shares- those shares with right to vote.

Non Voting Shares- shares with no voting rights.

As an owner of the thing, what are your rights over such?

Right to dispose it

Right to use

Right to sell

Right to the fruits of the thing

The Fruits of the thing (share of stock) is called the

DIVIDENDS. And by exercising his right to vote, ashareholder exercises his right to the fruits of his property - hisright to dividends.

! You invest because you expect fruits and yourexpectations to these fruits will depend on how thecorporation is organized and managed. (Otherwiseif you put this corporation into the hands of crazydirectors, do you think the corporation will earnprofits? So you have to make sure that before thedirectors will be able to manage this corporation,they are those that are qualified and competent.You should vote only those that are qualified andcompetent directors. The only way to ensure thatyour share will bear fruit is to make sure that thecorporation will be managed in the hands of goodBOD and corporate officers.

* * * * *

Apart from the right to votes, there are also other issues in

Corporation which may involve the SH themselves. Althoughwe said generally directors manage the corporation, there areissues that must be referred back to the SH for ratification and

approval. It is during this instance that the SH could participatedirectly in the Management of the Corpo.

GR: The Board of Directors have the sole discretion andcontrol over the management of the corporation.

XPN: When it involves issues that need to be referredback to the stockholders for ratification and approval.


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As a General Rule, Pre-emptive Right does notextend to Treasury Shares.

The purpose of pre-emptive right is to protect theshareholding of the stockholder in a corporation.

With this as the objective pre-emptive right, even if

existing stockholders got the opportunity to buy treasury

shares, is that objective achieved? Yes. There could be some

authors who say that existing stockholders will be allowed to

exercise their pre-emptive right of treasury shares.

We say that it is not because if we go by objective,

that objective is not violated or is still achieved even if the

stockholder is not given the opportunity or the option to buy

treasury shares.

As an exception, Pre-emptive Right extends toTreasury Shares in Close Corporations by

express provision of law.

However, if this was a close corporation and we got

the treasury shares, can the existing stockholders insist that

they should be given the opportunity to buy that share from

the other stockholder? Yes, to be able to maintain the stocks

within the close corporation. Otherwise, the objective is

violated.

The rule therefore, if we go by objective so far as

treasury shares are concerned:

The existing stockholder in a close corporation may

insist on exercising his pre-emptive right as to the treasury

shares of a corporation while in an open/widely-held

corporation, the existing stockholder cannot exercise their pre-

emptive right as to the treasury shares.


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Midterm WWW Compiled 2016- Atty. Espedido