#8 | Corp and Basic Sec Law | Title IV: Power of the Corporations | Section 35-38 (March 28, 2026)

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[00:01] Good evening.
[00:05] Good evening po, attorney.
[00:10] Let's proceed.
[00:12] Let's proceed. This week we're going to discuss um we're going to continue our discussion on the powers corporation.
[00:19] Uh on our first topic on the section 35 we discuss the power to sue and we sued okay and now we're going to move forward and discuss other powers of a corporation.
[00:32] To recap unless otherwise provided by law the board of directors or trustees exercises corporate powers.
[00:41] They conduct all business of the corporation and control all properties of the corporation.
[00:49] There are some limitations.
[00:54] One, these limitations are imposed by law.
[00:58] Second, if these limitations are
[01:03] second if these limitations are limitations with respect to uh functions
[01:07] limitations with respect to uh functions in which the board is constrained from
[01:10] in which the board is constrained from doing
[01:12] doing that means for exle the fundamental
[01:15] that means for exle the fundamental changes toation
[01:19] changes toation like um
[01:21] like um increasing the shares of stock or
[01:23] increasing the shares of stock or further issuing shares of stock of a
[01:25] further issuing shares of stock of a corporation
[01:27] corporation or
[01:30] increasing the bond indebtedness of a
[01:33] increasing the bond indebtedness of a corporation
[01:35] corporation or
[01:39] um if it involves
[01:42] um if it involves um
[01:46] um matters that are are fundamental to
[01:50] um matters that are are fundamental to uh the corporation. Okay. Say for
[01:53] uh the corporation. Okay. Say for example, another example will be um
[02:02] to exercise such other powers
[02:05] to exercise such other powers um which are not ordinarily um granted to it under its primary uh purposes under the articles of incorporation.
[02:17] incorporation. Okay.
[02:19] Okay. Sale or or purchase or receive, take or grant, hold, convey, sell pledge, mortgage and personal property of the college as well as to enter into a partnership joint venture merger all consolidation.
[02:37] joint venture merger all consolidation. The third limitation is um if there is if the board cannot exercise powers not possessed by the corporation.
[02:49] The corporation can also act through its corporate officers who may be authorized either expressly by the bylaws or board resolutions or implied such as by general practice or policy or as implied from its express powers.
[03:06] From its express powers.
[03:08] The general principles of agency govern the relation between the corporation and its officers or agents.
[03:15] In an SEC opinion dated August 17, 1995, the query was that may a corporation become a limited partner in a Philippine limited partnership.
[03:29] The SEC rule that a corporation cannot enter into a contract of partnership with an individual or another corporation on the prem if a corporation enters into a partnership agreement it will be bound by the acts of the persons who are not its duly appointed and authorized agents and officers which is entirely inconsistent with the policy of the law that the corporation shall manage its own affairs.
[03:57] The SEC only allows as an exception the application of this rule if the following conditions are complied with.
[04:03] First, the authority to enter into a
[04:09] First the authority to enter into a partnership relation is expressly conferred by the charter of the articles of incorporation and the nature of the business venture to be undertaken by the partnership is in line with the business authorized by the charter or articles incorporation.
[04:25] Second the agreement on the articles of partnership must provide that all the partners shall manage the partnership and the articles of partnership must stipulate that all the partners shall be jointly and severely liable for all the obligations of the partnership.
[04:43] Third, if it is a for corporation it musttain a license to transact business in the country in accordance with the corporation code of theppines.
[04:57] In another SEC opinion dated October 4, 2016, the question was that the issue was that may a corporation enter into a joint venture agreement with another company.
[05:10] venture agreement with another company having a similar purpose.
[05:15] SEC uh ruled in the affirmative.
[05:20] uh ruled in the affirmative.
[05:23] So it cited the case of our back at all versus sanitary manufacturing corporation wherein the Supreme Court help that under Philippine law a joint venture is a form of partnership and should be governed by the law of partnership.
[05:38] The Supreme Court has recognized a distinction between these two business forms and has held that although a corporation is as a general rule may be uh may be uh may not uh prohibited from entering into um partnerships.
[06:01] It may however engage in a joint venture with others.
[06:06] Further the commission in a lit of opinions has laid down the settled
[06:11] of opinions has laid down the settled rule that two or more corporations may enter into a joint venture through a contract or agreement if the nature of the venture is in line with the business authorized by their charters.
[06:30] Note however that under the revised corporation code this was already uh uh expressly provided under section 35.
[06:42] So the SEC opinion was 2006 opinion 2016 opinion it was now codified into the existing revised corporation code.
[06:52] Section 35 H provides now grants the corporation the power to enter into a joint venture.
[07:07] Another SEC opinion dated October 26, 2004.
[07:10] The issue was
[07:14] dated October 26, 2004.
[07:16] The issue was that that may the board of directors of a may the board of directors of a corporation order a temporary stop of corporation order a temporary stop of the business operation the business operation business operations for reason beyond business operations for reason beyond its control without approval from the its control without approval from the stockholders.
[07:32] stockholders.
[07:35] without approval from the stockholder the SEC held that no corporate powers the SEC held that no corporate powers confirmed upon the board of directors confirmed upon the board of directors usually refer only to ordinary business usually refer only to ordinary business transactions of the corporation and do transactions of the corporation and do not extend beyond the management of not extend beyond the management of ordinary corporate affairs not beyond ordinary corporate affairs not beyond the limits of its authority the limits of its authority while the performance of the corporate while the performance of the corporate functions pertaining to management of functions pertaining to management of the corporation is vested upon the board the corporation is vested upon the board the corporation code has expressly the corporation code has expressly restricted such board authority and made restricted such board authority and made certain corporate actions to rest for
[08:14] certain corporate actions to rest for their validity upon the concurrence of their validity upon the concurrence of the required statutory votes of the the required statutory votes of the stockholders or members by prior action stockholders or members by prior action or subsequent ratification.
[08:27] in in that particular case the issue as in in that particular case the issue as to the temporary stoppage of the to the temporary stoppage of the operation of a corporation can no longer operation of a corporation can no longer be classified as an ordinary business be classified as an ordinary business transaction such as to limit its transaction such as to limit its approval to the board of directors.
[08:46] The cessation of a corporate The cessation of a corporate entities business though it may only be entities business though it may only be temporary, is a fundamental concern temporary, is a fundamental concern which should be decided not only by the which should be decided not only by the board but also by the stockholders.
[09:10] There are three kinds of powers.
[09:15] First is the express powers.
[09:19] First is the express powers.
[09:22] The express powers are the powers expressly provided by the revised corporation code applicable special laws and the articles of incorporation.
[09:27] The express powers are the powers expressly provided by the revised corporation code applicable special laws and the articles of incorporation.
[09:31] The powers expressly provided in the revised corporation code are the part of the articles of incorporation even if such powers are not enumerated.
[09:34] The powers expressly provided in the revised corporation code are the part of the articles of incorporation even if such powers are not enumerated.
[09:40] The powers expressly provided in the revised corporation code are the part of the articles of incorporation even if such powers are not enumerated.
[09:45] Section 35 enumerates so that's um letters A to K the general powers of a corporations.
[09:48] Section 35 enumerates so that's um letters A to K the general powers of a corporations.
[09:52] Section 35 enumerates so that's um letters A to K the general powers of a corporations.
[10:01] Implied powers.
[10:04] Implied powers.
[10:06] The existence of implied powers of a corporation is recognized under section 35K of the revised corporation.
[10:09] The existence of implied powers of a corporation is recognized under section 35K of the revised corporation.
[10:14] Corporations are empowered to exercise
[10:17] Corporations are empowered to exercise such other powers as may be essential or such other powers as may be essential or necessary to carry out its purpose or necessary to carry out its purpose or purposes as stated in the articles.
[10:28] Purposes as stated in the articles.
[10:28] Lastly, incidental powers.
[10:31] Incidental powers are powers that are deemed confirmed on the corporation because they are incidental to the existence of the corporation.
[10:40] Corporations are deed given such powers because they are the consequences of the fact that they exist as juridical beings.
[10:56] Question.
[10:58] May a corporation whose primary purpose stated in articles of incorporation is selling selling a particular product can that corporation be likewise engaged in manufacturing
[11:29] All air.
[11:45] Wala air present.
[11:47] Wala air present absent.
[11:53] Unahon.
[11:56] Gooding.
[11:59] Gooding. Good evening. So the question is, may a corporation whose primary purpose is the sale of a product, as stated in the articles of incorporation, be or enter into a manufacturing business? Is that allowed?
[12:24] Well, as for the general.
[12:30] um corporation do um you have all cross powers and employed powers so my answer to the question again is yes it can allow
[12:47] allow >> so okay so what is your answer >> yes po attorney it can be allowed to attorney
[12:55] attorney >> why
[13:00] um because manufacturing is um necessary to sell the product or it is um reasonably incidental
[13:15] sa purpose po ng ng corporation, sa primary purpose of the corporation, how about selling and um entering into a buy and sell or trading
[13:36] with regards to the buy and sell.
[13:38] with regards to the buy and sell attorney Um.
[13:44] it cannot sell attorney unless first.
[13:48] it cannot sell attorney unless first buys or acquire those.
[13:53] how about?
[13:55] how about selling and.
[14:00] selling of a product.
[14:02] selling of a product and for exle.
[14:12] selling of a product and.
[14:17] engaging in or or um.
[14:22] engaging in or or um providing loans.
[14:30] Um.
[14:35] so ify purpose po is.
[14:42] for attorney it will it may engage in
[14:45] for attorney it will it may engage in loans po only if um the touch activity
[14:50] loans po only if um the touch activity is
[14:52] is necessary to its business pattern.
[14:57] necessary to its business pattern. What's your answer? What's your answer?
[15:00] What's your answer? What's your answer? Yes
[15:01] Yes it may be me.
[15:06] How about selling of a product and um
[15:12] How about selling of a product and um shipping
[15:21] when um
[15:24] when um with regards with the shipping po at
[15:29] with regards with the shipping po at um of course po attorney for me because
[15:32] um of course po attorney for me because um shipping is necessary din po iyung
[15:35] um shipping is necessary din po iyung purpose of selling. because
[15:38] purpose of selling. because um
[15:42] we sell products through sometimes we
[15:44] we sell products through sometimes we sell products our products
[15:47] sell products our products through shipping
[15:50] through shipping how about
[15:51] how about selling of a product okay that's the
[15:54] selling of a product okay that's the primary purpose and
[15:58] primary purpose and logistics 6
[16:14] mm
[16:17] mm selling of a product and logistics
[16:24] allowed both
[16:26] allowed both allowed to Same same um scenario. Okay.
[16:30] allowed to Same same um scenario. Okay.
[16:32] The primary purpose of your business is selling of a product.
[16:35] uh
[16:37] uh is it possible for you to engage in
[16:39] is it possible for you to engage in logistics?
[16:45] Um ano po Attorney?
[16:50] Um logistics will is valid po but um it will become
[16:54] uh an ultra viigorous act po if conducted
[16:59] as an independent business without proper or authority.
[17:06] What's your answer?
[17:13] Um if
[17:15] if yes po Attorney if if the products to be stored is for its own goods po.
[17:23] stored is for its own goods po.
[17:33] Arias,
[17:43] are you present?
[17:52] Are you present?
[17:54] Are you present?
[17:54] Good evening.
[17:59] Okay.
[18:03] If the primary purpose of your business is selling of a product, are you is it possible for your business to engage in manufacturing?
[18:24] Um, you're on mute.
[18:28] Yes, aing. Yes, engage in
[18:32] Yes, aing. Yes, engage in
[18:34] if your business if the primary purpose of your business is okay same question okay selling of a product is it possible or is it um are you allowed to enter into trading
[18:55] trading of ba mga general yes attorney.
[19:05] eh okay same question ha is it possible.
[19:09] eh okay same question ha is it possible or are you allowed to enter into providing loans.
[19:24] providing a business.
[19:27] a business.
[19:27] Okay.
[19:29] I want a concrete I want a firm answer from you.
[19:31] Yes or no?
[19:33] no? No attorney no.
[19:35] no.
[19:35] Okay.
[19:37] Same question.
[19:37] How about logistics?
[19:40] Yes or no?
[19:43] Yes or no?
[19:47] If business attorney attorney okay so in effect isa lang yung.
[19:51] okay so in effect isa lang yung isa lang yung no mo.
[19:53] isa lang yung no mo.
[19:53] Yes sir.
[20:03] oras.
[20:07] um yes attorney good evening po.
[20:10] um yes attorney good evening po.
[20:10] same questions.
[20:12] same questions okay telling of a product the primary.
[20:14] okay telling of a product the primary purpose of the business are you allowed.
[20:16] purpose of the business are you allowed to engage in manufacturing.
[20:19] to engage in manufacturing of the product.
[20:20] of the product.
[20:20] uh yes attorney.
[20:22] uh yes attorney.
[20:22] how about.
[20:24] how about uh trading.
[20:27] uh trading.
[20:27] um yes also attorney.
[20:30] um yes also attorney.
[20:30] How about providing loans?
[20:33] How about providing loans?
[20:33] No attorney.
[20:35] No attorney.
[20:35] How about logistics?
[20:38] How about logistics?
[20:38] Um, yes. Attorney.
[20:40] Um, yes. Attorney.
[20:40] So parehas kayo ni Miss or yas.
[20:46] Okay.
[20:49] Okay.
[20:49] Then an SEC opinion,
[20:52] Then an SEC opinion, okay, dated um.
[20:56] okay, dated um July 2007,
[20:59] July 2007, one of the issues presented to the.
[21:02] one of the issues presented to the commission was may a corporation whose
[21:04] commission was may a corporation whose primary purpose stated in the articles
[21:07] primary purpose stated in the articles of incorporation
[21:09] of incorporation is selling product engaged in
[21:13] is selling product engaged in manufacturing.
[21:15] manufacturing. The ruling of the SEC is in the
[21:17] The ruling of the SEC is in the negative.
[21:20] negative. Manufacturing is not incidental or in
[21:24] Manufacturing is not incidental or in furtherance of the business of selling
[21:29] furtherance of the business of selling whereas marketing and selling are
[21:31] whereas marketing and selling are logically inferable from the business of
[21:35] logically inferable from the business of manufacturing considering that there
[21:37] manufacturing considering that there must be an end user for the goods of
[21:39] must be an end user for the goods of products. The same could not be said for
[21:41] products. The same could not be said for the business of selling as covering the
[21:45] the business of selling as covering the business of manufacturing.
[21:47] business of manufacturing. The underlying reason for this is that
[21:49] The underlying reason for this is that it is not necessary or indispensable
[21:53] it is not necessary or indispensable that a trader or dealer of goods must
[21:57] that a trader or dealer of goods must also be the manufacturer.
[22:02] Okay, that's the ruling of the SEC
[22:07] with respect to general trading
[22:11] with respect to general trading that may be that is ano may be implied
[22:16] that may be that is ano may be implied okay from the power from the power of
[22:19] okay from the power from the power of selling a product
[22:22] selling a product right
[22:24] right walang problema yan general merchandise
[22:27] walang problema yan general merchandise general trading marami kayong nakikita
[22:29] general trading marami kayong nakikita niyan ba?
[22:32] niyan ba? How about providing loans? Obviously,
[22:36] How about providing loans? Obviously, no. Right? As a matter of fact, you have
[22:39] no. Right? As a matter of fact, you have to get a separate license from the BSP
[22:43] to get a separate license from the BSP for you to engage in providing loans.
[22:47] for you to engage in providing loans. Okay,
[22:49] Okay, that's a separate license all together.
[22:53] that's a separate license all together. Logistics, it's a different business.
[22:57] Logistics, it's a different business. Okay. Freight forwarding is different
[23:00] Okay. Freight forwarding is different business. you see mga trackers right
[23:06] business. you see mga trackers right may business sa mga tracking forwarding
[23:09] may business sa mga tracking forwarding that's separate
[23:12] that's separate yung mga
[23:14] yung mga um for example um manufacturers
[23:18] um for example um manufacturers um
[23:20] um they hire okay logistics company
[23:26] so that's entirely separate that's a
[23:29] so that's entirely separate that's a separate business. Now, magtatanong kayo
[23:32] separate business. Now, magtatanong kayo sir, bakit sa mga conglomerates sa
[23:35] sir, bakit sa mga conglomerates sa malalaking kumpanya
[23:38] malalaking kumpanya merong ah parang interconnected sila?
[23:42] merong ah parang interconnected sila? That's possible because that means they
[23:44] That's possible because that means they are vertically integrated.
[23:47] are vertically integrated. Ano ibig sabihin ng vertically
[23:49] Ano ibig sabihin ng vertically integrated? You have a mother
[23:51] integrated? You have a mother corporation, holding company, for
[23:55] corporation, holding company, for example,
[23:56] example, JG summit.
[24:00] JG summit. Gokong way group that's their mother
[24:02] Gokong way group that's their mother holding company
[24:05] holding company sa baba niyan separate businesses.
[24:09] sa baba niyan separate businesses. Okay. You have Universal Rubina
[24:11] Okay. You have Universal Rubina Corporation,
[24:13] Corporation, you have Cebu Pacific, you have o tawag
[24:18] you have Cebu Pacific, you have o tawag noun vertical integration.
[24:23] But the businesses
[24:25] But the businesses are separate.
[24:29] Okay? Hindi pwedeng same yan. Hindi
[24:32] Okay? Hindi pwedeng same yan. Hindi pwedeng si Universal Rubina Corporation
[24:35] pwedeng si Universal Rubina Corporation also be doing the logistics ba
[24:39] also be doing the logistics ba iba ang gumagawa ng logistics ni
[24:41] iba ang gumagawa ng logistics ni Universal Rubino Corporation.
[24:44] Universal Rubino Corporation. Okay. Definitely si Universal Rubina
[24:47] Okay. Definitely si Universal Rubina Corporation cannot engage in loans,
[24:52] Corporation cannot engage in loans, right? Providing loans on the getting
[24:55] right? Providing loans on the getting deposits from the public. May separate
[24:57] deposits from the public. May separate arm si JG Samit diyan. Ano ang separate
[25:00] arm si JG Samit diyan. Ano ang separate arm niya? Robinson's bang
[25:03] arm niya? Robinson's bang ba
[25:05] ba separate arm pa. Iba pa nga ang fintech
[25:07] separate arm pa. Iba pa nga ang fintech nila eh. Yung go time 'di ba?
[25:14] So iba-ibang businesses, iba-ibang
[25:16] So iba-ibang businesses, iba-ibang purpose but they can be vertically
[25:19] purpose but they can be vertically integrated by a holding company.
[25:26] para hindi kayo malito
[25:28] para hindi kayo malito any questions
[25:33] maraming ganyan sa Philippines. You have
[25:36] maraming ganyan sa Philippines. You have San Miguel,
[25:38] San Miguel, >> you have
[25:39] >> you have >> DMCI,
[25:41] >> DMCI, you have um
[25:44] you have um um
[25:47] um dami.
[25:49] dami. Mes What's the question,
[25:53] Mes What's the question, >> sir? It means in a holding uh holding
[25:55] >> sir? It means in a holding uh holding company uh maraming corporation under
[25:58] company uh maraming corporation under that holding.
[26:00] that holding. Yes, it's the mother company but take
[26:03] Yes, it's the mother company but take note, it's simp it's simply hold ang
[26:07] note, it's simp it's simply hold ang purpose lang ng holding company parang
[26:09] purpose lang ng holding company parang investment 'yan. Investment arm yan '
[26:13] investment 'yan. Investment arm yan ' ba? Ownership lang, ownership of stocks
[26:16] ba? Ownership lang, ownership of stocks lang ang kailangan niyan. They do not
[26:18] lang ang kailangan niyan. They do not run the affairs of the separate
[26:20] run the affairs of the separate business.
[26:22] business. separate businesses.
[26:24] separate businesses. Example example another example si SM
[26:29] Example example another example si SM investments yan yung parang
[26:33] investments yan yung parang mother company niyan eh. Okay? It owns
[26:38] mother company niyan eh. Okay? It owns the shares of stock
[26:40] the shares of stock different corporations of SM
[26:44] different corporations of SM but they do not run the affairs of the
[26:46] but they do not run the affairs of the business.
[26:48] business. Ano yung kinikita nito? Kumikita 'to ng
[26:50] Ano yung kinikita nito? Kumikita 'to ng dividend. inaakyat nila dividend
[26:54] dividend. inaakyat nila dividend okay sa other corporation inaakyat nila
[26:57] okay sa other corporation inaakyat nila yan that's why if you're into
[27:01] yan that's why if you're into investments for example ah sa stock
[27:04] investments for example ah sa stock exchange ka
[27:07] exchange ka sa mirara mining is under the arm of
[27:09] sa mirara mining is under the arm of dmci
[27:11] dmci okay another unit niya is dmci holding
[27:15] okay another unit niya is dmci holding okay under dcii holdings mayon silang
[27:18] okay under dcii holdings mayon silang mining and power mayon silang lang. So
[27:22] mining and power mayon silang lang. So you have Semirara mining and power you
[27:24] you have Semirara mining and power you have separate pa ang DMCI mining.
[27:27] have separate pa ang DMCI mining. Separate pa ang meron silang chartering
[27:29] Separate pa ang meron silang chartering business may um aviation sila.
[27:34] business may um aviation sila. obviously yung real estateung DMCI
[27:38] obviously yung real estateung DMCI condhintay
[27:49] lang siya ng dividends coming from its
[27:53] lang siya ng dividends coming from its businesses. If you notice now nung um
[27:57] businesses. If you notice now nung um hindi binigyan ng um hindi binigyan ng
[28:00] hindi binigyan ng um hindi binigyan ng extension ng mining permit ng government
[28:03] extension ng mining permit ng government si Mirara mining
[28:06] si Mirara mining bumaba yung ah yung stock value ni
[28:11] bumaba yung ah yung stock value ni Samirara mining.
[28:13] Samirara mining. Okay? Kasi hindi in-extend e.
[28:18] Okay? Kasi hindi in-extend e. Ano nangyari sa stock value ni DMCI
[28:21] Ano nangyari sa stock value ni DMCI holdings? Bumaba din.
[28:25] holdings? Bumaba din. So ganun yung effect niya kasi wala yung
[28:31] So ganun yung effect niya kasi wala yung akyat ng dividends will also be affected
[28:35] akyat ng dividends will also be affected ba. So if you're the mother company
[28:38] ba. So if you're the mother company um
[28:41] um you're going to be concerned also,
[28:43] you're going to be concerned also, right? Because if the if if um yung mga
[28:47] right? Because if the if if um yung mga subsidiaries mo you're not performing
[28:50] subsidiaries mo you're not performing well, they're not going to you
[28:52] well, they're not going to you dividends.
[28:55] dividends. That's it.
[29:00] Any other questions? Meron dala. Oo
[29:03] Any other questions? Meron dala. Oo sige,
[29:06] sige, follow up questions.
[29:08] follow up questions. Yung sa holding company, Attorney, may
[29:10] Yung sa holding company, Attorney, may mga corporation pero yung mga yung ah
[29:13] mga corporation pero yung mga yung ah meron bang parang vertical relation yung
[29:15] meron bang parang vertical relation yung mga corporation under that holdings or
[29:18] mga corporation under that holdings or talagang dapat separate din sila ng ah
[29:22] talagang dapat separate din sila ng ah parang mga primary ano nila separation.
[29:25] parang mga primary ano nila separation. Pwedeng maging interconnected pa rin po
[29:26] Pwedeng maging interconnected pa rin po yun.
[29:27] yun. The only reason they're interconnected
[29:29] The only reason they're interconnected is because they're vertically
[29:31] is because they're vertically integrated.
[29:32] integrated. So for example,
[29:35] So for example, Semirara Mining and Power Corporation
[29:38] Semirara Mining and Power Corporation is technically into mining and power
[29:42] is technically into mining and power pero separate kasi yung contract niya
[29:45] pero separate kasi yung contract niya with the government. As opposed, meron
[29:47] with the government. As opposed, meron ding mining arm eh. Separate mining arm
[29:49] ding mining arm eh. Separate mining arm si DMCI. Ang pangalan niya DMCI mining.
[29:54] si DMCI. Ang pangalan niya DMCI mining. DMC. Dalawa yan ha. DMCI mining,
[29:56] DMC. Dalawa yan ha. DMCI mining, Semerara mining both under
[30:00] Semerara mining both under DMCI holdings
[30:02] DMCI holdings pero iba yung pagpapatakbo altogether.
[30:05] pero iba yung pagpapatakbo altogether. Iba hindi sila nag ah hindi sila
[30:08] Iba hindi sila nag ah hindi sila nagshe-share ng assets. Hindi sila
[30:11] nagshe-share ng assets. Hindi sila nagshe-share ng management. Iba ang
[30:13] nagshe-share ng management. Iba ang presidente ng DMCI mining. Iba ang
[30:15] presidente ng DMCI mining. Iba ang presidente ng Semirara mining.
[30:21] So nung tumaas yung bumaba yung value ng
[30:24] So nung tumaas yung bumaba yung value ng Semirara mining, bumaba ang value ng
[30:26] Semirara mining, bumaba ang value ng DMCI mining? Not necessary.
[30:30] DMCI mining? Not necessary. Ang bumaba ang value DMCI holdings
[30:34] Ang bumaba ang value DMCI holdings mother corporation but not DMCI mining.
[30:39] mother corporation but not DMCI mining. Okay? Ganun din yan. So SM San Miguel
[30:42] Okay? Ganun din yan. So SM San Miguel Corporation
[30:44] Corporation um John Gokong way group of companies.
[30:49] um John Gokong way group of companies. So basically that's how our economy is
[30:52] So basically that's how our economy is in the country right now. We're being
[30:54] in the country right now. We're being run by conglomerates in the country.
[30:57] run by conglomerates in the country. So
[30:59] So um if you if you're very familiar with
[31:03] um if you if you're very familiar with how these companies are set up then more
[31:06] how these companies are set up then more or less yung corporate law practice niyo
[31:08] or less yung corporate law practice niyo won't be that um um at least if kung
[31:14] won't be that um um at least if kung gusto niyong mag-focus sa corporate law
[31:15] gusto niyong mag-focus sa corporate law practice andun ang karamihan ng um mga
[31:19] practice andun ang karamihan ng um mga big corporations no sa mga conglomerates
[31:23] big corporations no sa mga conglomerates um also um smaller corporations
[31:27] um also um smaller corporations Um
[31:29] Um kung gusto niyo lang ang advice ko lang
[31:30] kung gusto niyo lang ang advice ko lang is kung gusto niyong mag-enouse council
[31:32] is kung gusto niyong mag-enouse council syempre doon kayo sa mga malalaking
[31:34] syempre doon kayo sa mga malalaking corporations global.
[31:37] corporations global. That's where the corporate practice you
[31:39] That's where the corporate practice you is merong maliliit na corporations but
[31:43] is merong maliliit na corporations but it's better to be an external council.
[31:46] it's better to be an external council. just provide uh you just provide
[31:49] just provide uh you just provide legal advice or kuha lang kayo ng
[31:51] legal advice or kuha lang kayo ng retainer for those smallers.
[31:58] Any other questions?
[32:01] Any other questions? So interesting ano ganyan yung setup
[32:03] So interesting ano ganyan yung setup niya. So um later on we'll be reviewing
[32:07] niya. So um later on we'll be reviewing on we'll be studying the grandfather
[32:09] on we'll be studying the grandfather rule how it affects the um
[32:12] rule how it affects the um constitutional 6040 nationality
[32:15] constitutional 6040 nationality requirement kasi maraming nags-skirt ng
[32:18] requirement kasi maraming nags-skirt ng nag ah nag se-circumvent ng um
[32:22] nag ah nag se-circumvent ng um nationality requirement ng constitution
[32:25] nationality requirement ng constitution what they do they do corporate layering.
[32:28] what they do they do corporate layering. So initially while pasok ka sa 6040
[32:30] So initially while pasok ka sa 6040 requirement but if you look at if you
[32:33] requirement but if you look at if you look deeper at the shareholders of the
[32:35] look deeper at the shareholders of the corporation puro pala
[32:38] corporation puro pala mga foreigners.
[32:41] mga foreigners. So there there are many cases on that no
[32:46] So there there are many cases on that no but the leading case really is Gamboa
[32:49] but the leading case really is Gamboa versus
[32:51] versus um with respect to the grandfather here
[32:54] um with respect to the grandfather here because um pagdating sa compliance sa
[32:59] because um pagdating sa compliance sa constitutional requirement 6040 rule
[33:02] constitutional requirement 6040 rule hindi enough na kung ano yung on on
[33:05] hindi enough na kung ano yung on on record na nakalagay sa stockholder book
[33:08] record na nakalagay sa stockholder book hindi enough yun kasi although Nakalista
[33:10] hindi enough yun kasi although Nakalista yun doun lahat kasi pag doun mo lang
[33:12] yun doun lahat kasi pag doun mo lang titingnan pwedeng complied na sila sa
[33:14] titingnan pwedeng complied na sila sa 6040.
[33:16] 6040. But if you look deeper, hindi pala ang
[33:19] But if you look deeper, hindi pala ang nagpapatakbo pala na mga some of the
[33:22] nagpapatakbo pala na mga some of the companies there are foreign nationals.
[33:25] companies there are foreign nationals. So that's why basically the essence of
[33:27] So that's why basically the essence of the the Gamboa ruling is that um it's
[33:31] the the Gamboa ruling is that um it's not just stock ownership but it's also
[33:35] not just stock ownership but it's also beneficial ownership
[33:37] beneficial ownership who controls the corporations uh who own
[33:41] who controls the corporations uh who own the subject corporation.
[33:45] And um so what are the business what are
[33:49] And um so what are the business what are the types of businesses that are covered
[33:51] the types of businesses that are covered under the constitutional require
[33:53] under the constitutional require nationality requirement under the
[33:54] nationality requirement under the constitution? Madami. We have media.
[33:58] constitution? Madami. We have media. Kita niyo you just look at the provision
[34:00] Kita niyo you just look at the provision that on article 12 found in article 12
[34:04] that on article 12 found in article 12 of in the constitution we have media
[34:06] of in the constitution we have media mining expectation of natural resources
[34:10] mining expectation of natural resources um definitely water is included. You
[34:13] um definitely water is included. You have energy the energy business.
[34:21] So um in relation to the crisis that's
[34:24] So um in relation to the crisis that's happening now. So if you notice
[34:29] happening now. So if you notice um kung meron bang nationality
[34:32] um kung meron bang nationality requirement
[34:34] requirement okay diyan yes meron national
[34:38] okay diyan yes meron national nationality requirementya. Okay. So
[34:41] nationality requirementya. Okay. So that's why you Shell you have Shell
[34:42] that's why you Shell you have Shell Philippines. It's not really um like the
[34:45] Philippines. It's not really um like the Shell Dutch company that's um running
[34:48] Shell Dutch company that's um running the business here in the country. Meron
[34:50] the business here in the country. Meron dinevron Chevron Philippines. It's not
[34:53] dinevron Chevron Philippines. It's not really the it's not really the
[34:56] really the it's not really the chevronest bas uh um abroad that's
[34:59] chevronest bas uh um abroad that's running the affairs here in the country.
[35:01] running the affairs here in the country. It's a separate it's a separate entity
[35:03] It's a separate it's a separate entity but obviously um it's pattered after you
[35:07] but obviously um it's pattered after you know the multinational business of of
[35:10] know the multinational business of of challenge ofron Petron is a different
[35:12] challenge ofron Petron is a different case kasi dating PNOC yan eh PNOC may
[35:15] case kasi dating PNOC yan eh PNOC may hawak niyan um and then it was bought it
[35:17] hawak niyan um and then it was bought it was privatized.
[35:20] was privatized. Okay. Um and then you have new players
[35:23] Okay. Um and then you have new players no ever since um the oil industry have
[35:26] no ever since um the oil industry have been regulated dumabi na yung mga
[35:29] been regulated dumabi na yung mga private um companies who entered the oil
[35:33] private um companies who entered the oil industry. So now you have sea oil mga
[35:37] industry. So now you have sea oil mga ganyan you have phoenix etc etc. dumami
[35:40] ganyan you have phoenix etc etc. dumami na sila and um it's really it's it has
[35:43] na sila and um it's really it's it has become more of um uh
[35:48] become more of um uh um
[35:50] um ang issue ang issue na dito is parang
[35:52] ang issue ang issue na dito is parang plain and simple law on supply no supply
[35:55] plain and simple law on supply no supply and demand issue law on supply and
[35:57] and demand issue law on supply and demand issue na so kaya tumataas yung
[36:00] demand issue na so kaya tumataas yung presyo because basically what's
[36:01] presyo because basically what's happening in the market right now
[36:06] okay medyo complicated yan let's Um,
[36:10] okay medyo complicated yan let's Um, balik na tayo sa topic natin no sa sa
[36:13] balik na tayo sa topic natin no sa sa corporate powers.
[36:18] Okay lang po magasarification.
[36:22] >> Yes.
[36:24] >> Yes. Just in relation to your questions
[36:26] Just in relation to your questions earlier.
[36:27] earlier. >> Yes.
[36:28] >> Yes. >> Yes po Attorney. Um so
[36:32] >> Yes po Attorney. Um so few of my classmates answers different
[36:34] few of my classmates answers different uh answers.
[36:36] uh answers. Um so based on this based on my
[36:39] Um so based on this based on my understanding
[36:41] understanding um a corporation
[36:43] um a corporation can be in manufacturing in loans etc etc
[36:49] can be in manufacturing in loans etc etc as long as it's provided under the
[36:51] as long as it's provided under the article of the incorporation or um
[36:59] article of the incorporation or um it must have a separate uh group
[37:03] it must have a separate uh group which is which has a vertical
[37:05] which is which has a vertical relationship
[37:06] relationship in a company
[37:09] in a company >> no yung verticalung vertical integration
[37:11] >> no yung verticalung vertical integration remember even in vertical integration
[37:14] remember even in vertical integration the holding company is not really do
[37:17] the holding company is not really do performing the operations so it's not
[37:19] performing the operations so it's not really engaged for example um yung
[37:22] really engaged for example um yung example natin kanina ba si universal
[37:25] example natin kanina ba si universal rubina corporation ang holding company
[37:28] rubina corporation ang holding company nila is JG summit JG Summit is not the
[37:32] nila is JG summit JG Summit is not the one do is doing the business of ah
[37:36] one do is doing the business of ah Universal Rubina Corporation.
[37:38] Universal Rubina Corporation. Stock ownership lang siya. So iba yun
[37:41] Stock ownership lang siya. So iba yun kasi ang business ni ang if you look at
[37:44] kasi ang business ni ang if you look at the articles of incorporation ni JG
[37:47] the articles of incorporation ni JG Summit, ang nakalagay doon um parang to
[37:52] Summit, ang nakalagay doon um parang to invest no to invest in corporations. So
[37:56] invest no to invest in corporations. So yun yung primary purpose niya. So yun
[38:00] yun yung primary purpose niya. So yun lang mag-invest siya and then dividends
[38:02] lang mag-invest siya and then dividends get dividends ba yun yung business niya.
[38:05] get dividends ba yun yung business niya. So it's the mother corporation but it's
[38:07] So it's the mother corporation but it's not allowed to operate Universal Rubina
[38:11] not allowed to operate Universal Rubina Corporation in the same way that it's
[38:13] Corporation in the same way that it's not allowed to allowed to operate Cebu
[38:15] not allowed to allowed to operate Cebu Pacific.
[38:18] Pacific. Ganun siya. So iba. So for example
[38:23] Ganun siya. So iba. So for example you look at Universal Rubina Corporation
[38:26] you look at Universal Rubina Corporation Universal Rubina Corporation
[38:28] Universal Rubina Corporation cannot invest because it's not in its
[38:31] cannot invest because it's not in its primary per it's not it's not expressly
[38:35] primary per it's not it's not expressly provided for in its uh articles of
[38:38] provided for in its uh articles of incorporation.
[38:41] incorporation. So ang question mo ngayon is so attorney
[38:44] So ang question mo ngayon is so attorney kung nakalagay naman lahat sa articles
[38:47] kung nakalagay naman lahat sa articles sa primary primary purpos articles
[38:51] sa primary primary purpos articles articles of incorporation mo yung
[38:52] articles of incorporation mo yung primary purposes mo yung iba-ibang types
[38:56] primary purposes mo yung iba-ibang types of business pwede na ba yon
[39:00] of business pwede na ba yon ang sagot hindi kayo bibigyan ng
[39:03] ang sagot hindi kayo bibigyan ng lisensya ni FEC
[39:06] lisensya ni FEC yan ang sagot diyan
[39:09] yan ang sagot diyan bakit Eh magulo 'yun eh.
[39:12] bakit Eh magulo 'yun eh. 'Di ba? Magulo 'yung setup na 'yun.
[39:14] 'Di ba? Magulo 'yung setup na 'yun. Lahat na lang ng types of businesses
[39:16] Lahat na lang ng types of businesses gagawin mo.
[39:19] gagawin mo. You're going to confuse the public.
[39:20] You're going to confuse the public. you're also going to confuse um the
[39:26] you're also going to confuse um the the you know the commerce behind um um
[39:30] the you know the commerce behind um um or the the visit kumbaga kumbaga the
[39:34] or the the visit kumbaga kumbaga the part of SEC mahirap kang i-regulate
[39:38] part of SEC mahirap kang i-regulate kasi ano ka ba anong purpose mo that's
[39:42] kasi ano ka ba anong purpose mo that's why it's the easiest the easiest ang
[39:45] why it's the easiest the easiest ang pinaka generic diyan is yung yung buy
[39:49] pinaka generic diyan is yung yung buy and sell ' ba
[39:53] and sell ' ba general trading marami ng pwede maraming
[39:57] general trading marami ng pwede maraming pwedeng pumasok diyan eh so ano kasama
[40:01] pwedeng pumasok diyan eh so ano kasama doon pwede kang mag-marketing pwede kang
[40:04] doon pwede kang mag-marketing pwede kang mag of course mag-trading
[40:07] mag of course mag-trading magbenta you know etc etc
[40:12] magbenta you know etc etc any product pwede any product 'di ba for
[40:16] any product pwede any product 'di ba for example importer ka ng ch sa ng example
[40:20] example importer ka ng ch sa ng example Chinese products 'di ba? Pupunta ka ng
[40:22] Chinese products 'di ba? Pupunta ka ng China maghahanap ka ng mga mumurang
[40:25] China maghahanap ka ng mga mumurang bibilhin
[40:27] bibilhin regardless of what product ' ba. Pwedeng
[40:29] regardless of what product ' ba. Pwedeng pwedeng IT products yan pwedeng
[40:33] pwedeng IT products yan pwedeng mga damit yan fast passion pwedeng
[40:37] mga damit yan fast passion pwedeng mag-import ka ng um pagkain
[40:42] mag-import ka ng um pagkain pasok tapos ano business mo buy and then
[40:47] pasok tapos ano business mo buy and then sell it to the public.
[40:49] sell it to the public. ba doesn't matter ba still good ba iba
[40:53] ba doesn't matter ba still good ba iba naman yun sa service ba iba ang service
[40:56] naman yun sa service ba iba ang service ba you're selling products naman you're
[40:59] ba you're selling products naman you're buying products you're selling products
[41:02] buying products you're selling products pero if papas pag papasok ka na sa medyo
[41:06] pero if papas pag papasok ka na sa medyo ano ba yun um highly regulated
[41:09] ano ba yun um highly regulated businesses like for example water
[41:12] businesses like for example water 'di ba hindi mo na hindi kasi the
[41:16] 'di ba hindi mo na hindi kasi the license of engaging in water business is
[41:19] license of engaging in water business is parang ano eh separate eh. Kukuha ka ng
[41:23] parang ano eh separate eh. Kukuha ka ng permit sa MWRB,
[41:25] permit sa MWRB, kukuha ka ng permit sa marami kang
[41:28] kukuha ka ng permit sa marami kang permit kukunin. Okay? The same way as
[41:31] permit kukunin. Okay? The same way as mining. Mining is a is a highly
[41:34] mining. Mining is a is a highly regulated business. Hindi pwedeng may
[41:37] regulated business. Hindi pwedeng may mining ka tapos meron kang ah
[41:41] mining ka tapos meron kang ah importation, meron kang or logistics.
[41:44] importation, meron kang or logistics. Magulo yun
[41:46] Magulo yun ba magulo yung business na yon and you
[41:49] ba magulo yung business na yon and you will not baka ang problema non hindi ka
[41:51] will not baka ang problema non hindi ka bibigyan ng permit
[41:55] bibigyan ng permit kasi may mga regulations
[41:58] kasi may mga regulations special regulations for mining.
[42:02] special regulations for mining. So for example si si M si Dr
[42:05] So for example si si M si Dr para ming permit dapat pasok ka sa sa
[42:09] para ming permit dapat pasok ka sa sa mga sa mga requirements
[42:13] mga sa mga requirements eh paano kung yung ang and I think and
[42:15] eh paano kung yung ang and I think and as far as I know the requirements one of
[42:17] as far as I know the requirements one of the requirements is meron kang um meron
[42:22] the requirements is meron kang um meron kang financial and technical capacity to
[42:25] kang financial and technical capacity to do so eh paano kung pinakita mo okay
[42:29] do so eh paano kung pinakita mo okay naglo-logistics ka nag magulo yung
[42:31] naglo-logistics ka nag magulo yung business mo.
[42:33] business mo. DNR will say easily say wala kang
[42:36] DNR will say easily say wala kang technical capacity ang dami mong
[42:38] technical capacity ang dami mong ginagawa.
[42:42] Wala rin ' ba. So that's what I'm
[42:48] Wala rin ' ba. So that's what I'm siguro what I'm trying to point out is
[42:50] siguro what I'm trying to point out is it's
[42:52] it's really it's really not possible.
[42:54] really it's really not possible. Technically it's not possible. kumbaga
[42:56] Technically it's not possible. kumbaga attorney it's one corporation uh
[43:00] attorney it's one corporation uh must have one primary purpose only other
[43:03] must have one primary purpose only other than that it's invalid that's the idea
[43:06] than that it's invalid that's the idea setup that's the ideal setup kaya
[43:10] setup that's the ideal setup kaya nagkakaroon lang ng vertical integration
[43:14] nagkakaroon lang ng vertical integration nagkakaroon lang ng vertical integration
[43:17] nagkakaroon lang ng vertical integration um
[43:19] um okay I hope that's clear so very ano ah
[43:22] okay I hope that's clear so very ano ah iyung SEC legal opinyon na iyon you know
[43:25] iyung SEC legal opinyon na iyon you know that's still um stands as of today.
[43:28] that's still um stands as of today. Okay. So you're engaged in
[43:30] Okay. So you're engaged in manufacturing. So for example Mondinisen
[43:34] manufacturing. So for example Mondinisen 'di ba manufacturing of food products ba
[43:38] 'di ba manufacturing of food products ba Monisen
[43:40] Monisen yun langung dapat ah nak nakaindicate
[43:45] yun langung dapat ah nak nakaindicate din no sa articles of incorporation mo
[43:49] din no sa articles of incorporation mo that you're also going to engage in
[43:51] that you're also going to engage in distribution of your own product.
[43:55] Yan pwede yan kasi it's your own product
[43:58] Yan pwede yan kasi it's your own product eh. Okay? Iba ibang iba yung yung
[44:02] eh. Okay? Iba ibang iba yung yung question mo kanina. For example,
[44:04] question mo kanina. For example, logistics, mining tapos meron ka pang
[44:08] logistics, mining tapos meron ka pang finance mga financial products. Malabo
[44:10] finance mga financial products. Malabo yon. Okay? It must be in a way related
[44:14] yon. Okay? It must be in a way related to your kumbaga kumbaga you have your
[44:17] to your kumbaga kumbaga you have your business model, right? Your business
[44:19] business model, right? Your business model is manufacturing and then
[44:23] model is manufacturing and then distribution. Pwede yun but it has to be
[44:26] distribution. Pwede yun but it has to be clear in your articles. Pwede ring
[44:28] clear in your articles. Pwede ring business model ko manufacturing lang.
[44:33] business model ko manufacturing lang. Yun lang nakalagay sa articles.
[44:36] Yun lang nakalagay sa articles. 'Di ba?
[44:39] 'Di ba? Now the question is kung ano ba yung
[44:41] Now the question is kung ano ba yung gagawin mo, it will now it will now be
[44:45] gagawin mo, it will now it will now be based on your um business judgment.
[44:50] based on your um business judgment. Okay. Kung sa tingin mo kaya ko ong
[44:52] Okay. Kung sa tingin mo kaya ko ong gawin, kaya kong ipatakbo yung business
[44:54] gawin, kaya kong ipatakbo yung business ko na manufacturing tsaka um
[44:59] ko na manufacturing tsaka um distribution
[45:01] distribution go ahead do so. You will earn more
[45:03] go ahead do so. You will earn more profits that way. Okay. Pero if tingin
[45:07] profits that way. Okay. Pero if tingin mo no, focus muna ako sa manufacturing.
[45:09] mo no, focus muna ako sa manufacturing. Dito muna ako. Kikita ako dito ng
[45:12] Dito muna ako. Kikita ako dito ng malaki. Bahala na yung distribution arm.
[45:14] malaki. Bahala na yung distribution arm. Ayawo ng sakit sa ulo. Pwede ganon. It
[45:16] Ayawo ng sakit sa ulo. Pwede ganon. It depends. Case to case basis yan.
[45:21] depends. Case to case basis yan. So
[45:23] So um but ayan so yan yung medyo related
[45:26] um but ayan so yan yung medyo related manufacturing distribution and then um
[45:31] manufacturing distribution and then um distribution and kasama kasama sa
[45:34] distribution and kasama kasama sa distribution ang selling okay ang
[45:37] distribution ang selling okay ang manufacturing iba okay so that's clear
[45:41] manufacturing iba okay so that's clear from the SEC opinion the distribution
[45:44] from the SEC opinion the distribution pwede kang magbenta pwede kang magmarket
[45:49] just to be clear.
[45:52] just to be clear. Okay.
[45:53] Okay. >> Thank you for
[45:56] >> Thank you for >> all right. Um
[46:02] there is such a thing as the stretching
[46:04] there is such a thing as the stretching the purpose clause rule. The SEC adopted
[46:07] the purpose clause rule. The SEC adopted the stretching of purpose clauses rule
[46:09] the stretching of purpose clauses rule under which it is legal to stretch the
[46:12] under which it is legal to stretch the meaning of the purpose clause to cover
[46:15] meaning of the purpose clause to cover unexpected situations. Situations and
[46:18] unexpected situations. Situations and circumstances may arise which could not
[46:20] circumstances may arise which could not have been foresen at the time of
[46:22] have been foresen at the time of incorporation that can be accommodated
[46:25] incorporation that can be accommodated by the stretched interpretation of the
[46:27] by the stretched interpretation of the purpose clause. There is no more need to
[46:31] purpose clause. There is no more need to amend the articles of incorporation to
[46:33] amend the articles of incorporation to accommodate new situations. For
[46:36] accommodate new situations. For instance, a provision in the articles
[46:39] instance, a provision in the articles allowing a corporation to contract with
[46:41] allowing a corporation to contract with other local and international
[46:44] other local and international organizations
[46:45] organizations may be stretched and construed in such a
[46:48] may be stretched and construed in such a way as to allow the corporation to
[46:51] way as to allow the corporation to donations to a foreign oranation.
[47:01] So I'll just give you example no. So the
[47:05] So I'll just give you example no. So the articles of incorporation of X
[47:07] articles of incorporation of X corporation states
[47:10] corporation states the primary purpose of this corporation
[47:12] the primary purpose of this corporation is to engage in the business of
[47:14] is to engage in the business of manufacturing goods such as jewelry and
[47:17] manufacturing goods such as jewelry and to trade the same on wholesale.
[47:21] to trade the same on wholesale. Is it qualified to engage in jewelry
[47:24] Is it qualified to engage in jewelry and refining activities if the same is
[47:26] and refining activities if the same is not expressly provided for as secondary
[47:28] not expressly provided for as secondary purpose?
[47:30] purpose? Okay. So according to uh the SEC the
[47:35] Okay. So according to uh the SEC the answer is yes. Jewelry assaying and
[47:38] answer is yes. Jewelry assaying and refining activities are implied powers
[47:41] refining activities are implied powers of the corporation.
[47:45] Another problem the primary purpose of X
[47:48] Another problem the primary purpose of X corporation is to carry mineral
[47:50] corporation is to carry mineral exploration and exploitation.
[47:53] exploration and exploitation. Exploration and exploitation. Can it
[47:56] Exploration and exploitation. Can it engage in money or crewing business?
[48:00] engage in money or crewing business? The answer is
[48:02] The answer is no.
[48:04] no. The corporation cannot engage in crewing
[48:06] The corporation cannot engage in crewing business because the same is not
[48:08] business because the same is not expressly stated and cannot be implied
[48:11] expressly stated and cannot be implied from the business of mineral exploration
[48:15] from the business of mineral exploration and exploitation.
[48:18] and exploitation. Okay.
[48:23] Another one. Okay. So ito yyung primary.
[48:26] Another one. Okay. So ito yyung primary. Ito yung purpose clause niya. to engage
[48:29] Ito yung purpose clause niya. to engage in and carry on a general mercantile and
[48:33] in and carry on a general mercantile and commercial business of buying
[48:37] commercial business of buying acquiring
[48:39] acquiring holding
[48:41] holding importing and exporting selling or
[48:44] importing and exporting selling or otherwise disposing of and dealing in
[48:47] otherwise disposing of and dealing in any goods merchandise commodities
[48:50] any goods merchandise commodities particularly computer and its
[48:53] particularly computer and its peripherals, electronic, industrial
[48:56] peripherals, electronic, industrial and engineering. items.
[49:00] and engineering. items. Can x corporation
[49:02] Can x corporation lawfully entered into computer
[49:06] lawfully entered into computer maintenance service contracts?
[49:12] The answer is
[49:14] The answer is no.
[49:17] no. Okay. No, the purpose clause does not
[49:20] Okay. No, the purpose clause does not authorize the corporation to engage in
[49:22] authorize the corporation to engage in computer maintenance service.
[49:31] So, I'm just giving you examples so more
[49:33] So, I'm just giving you examples so more or less you get the idea. Okay.
[49:38] or less you get the idea. Okay. Another one,
[49:42] the purpose clause of a corporation
[49:45] the purpose clause of a corporation states.
[49:46] states. Ayan, sige, what I'll do na lang, I'll
[49:48] Ayan, sige, what I'll do na lang, I'll post it.
[49:50] post it. Okay, I'll post it in the chat box and
[49:53] Okay, I'll post it in the chat box and then let's see
[49:56] then let's see what your answers are.
[49:59] what your answers are. Obviously ito na to lalabas sa ninyo.
[50:47] You can type your answers.
[51:07] Ito mga ganitong tanong. Mga pang bar to
[51:12] yung mga ganitong tanong sa bar.
[51:24] M huwag niyo namang iano-chat
[51:28] magcha-chat GPT pa kayo. Grabe naman ko.
[51:32] magcha-chat GPT pa kayo. Grabe naman ko. Sige na
[51:33] Sige na bilis.
[51:36] bilis. Huwag ni iano yan oh. Yes. This is O.
[51:39] Huwag ni iano yan oh. Yes. This is O. No. Yes. Yes. W hindi naman graded yan
[51:42] No. Yes. Yes. W hindi naman graded yan eh. Oh. Oh yes yes
[51:55] >> one. I see. How many yes? Parang mas
[51:59] >> one. I see. How many yes? Parang mas madami yung yes. Ano?
[52:03] Madami yung yes.
[52:06] Madami yung yes. Alam mo meron talagang riple effect
[52:08] Alam mo meron talagang riple effect minsan eh no? Pag sinimulan ng isa
[52:10] minsan eh no? Pag sinimulan ng isa susunod yung iba.
[52:14] susunod yung iba. No people effect parang damay-damay
[52:18] No people effect parang damay-damay ba
[52:20] ba oo
[52:22] oo so the answer is no memorial part
[52:26] so the answer is no memorial part business is not expressly included in
[52:29] business is not expressly included in the purpose clause of the articles
[52:32] the purpose clause of the articles neither is the activity necessary
[52:34] neither is the activity necessary orcidental in the further of the
[52:37] orcidental in the further of the corporation present which
[52:41] corporation present which Realty accordingly the corporation
[52:43] Realty accordingly the corporation cannot on the basis of its present
[52:45] cannot on the basis of its present purpose
[52:47] purpose engage in memorial part business.
[52:52] engage in memorial part business. Iba kasi ang memorial part business sa
[52:55] Iba kasi ang memorial part business sa realty business.
[52:57] realty business. Mm.
[52:59] Mm. Yun ang sabi ng SCC. Another one.
[53:39] Sabi ni Miss Kisan no
[53:42] Sabi ni Miss Kisan no bilis Miss Kisan.
[53:45] bilis Miss Kisan. How about the rest?
[53:49] How about the rest? No. No. Ayan na yung ano.
[53:52] No. No. Ayan na yung ano. Hawa-hawa na to. Ayan. Mr. Calabia. Yes,
[54:03] an
[54:10] sale of cellular phones, accessories and
[54:13] sale of cellular phones, accessories and other telecommunications
[54:15] other telecommunications equipment can be considered implied
[54:18] equipment can be considered implied power. They are allowed because the sale
[54:21] power. They are allowed because the sale of the properties is reasonably required
[54:24] of the properties is reasonably required by the lawful transaction of its
[54:27] by the lawful transaction of its business expressed in the purpose
[54:29] business expressed in the purpose clause.
[54:31] clause. Okay.
[54:33] Okay. The sale of those products is a part of
[54:35] The sale of those products is a part of its telecommunication services to the
[54:39] its telecommunication services to the public.
[54:52] So sometimes the trick there is how you
[54:55] So sometimes the trick there is how you word your purpose,
[54:57] word your purpose, okay? How worded it's very important.
[55:09] So let's move on. Okay. So let's look at
[55:14] So let's move on. Okay. So let's look at the other powers of the of a
[55:15] the other powers of the of a corporation. So um the next power is the
[55:19] corporation. So um the next power is the power to sell proper to sell real
[55:21] power to sell proper to sell real properties. A corporation may sell or
[55:24] properties. A corporation may sell or convey its real properties subject to
[55:26] convey its real properties subject to the limitations prescribed by law and
[55:29] the limitations prescribed by law and the constitution. The property of a
[55:31] the constitution. The property of a corporation is not the property of the
[55:33] corporation is not the property of the stockholders. or
[55:37] stockholders. or may not be sold without express
[55:39] may not be sold without express authority from the board of directors
[55:42] authority from the board of directors acts like the offering of the properties
[55:45] acts like the offering of the properties of the corporation for sale or the
[55:47] of the corporation for sale or the acceptance of a counter offer of
[55:50] acceptance of a counter offer of prospective buyers of such properties
[55:52] prospective buyers of such properties and the execution of the deed of sale
[55:55] and the execution of the deed of sale covering such properties can be
[55:57] covering such properties can be performed by the corporation only by
[56:00] performed by the corporation only by officers or agents duly authorized for
[56:03] officers or agents duly authorized for the purpose
[56:06] by the any s of property of a
[56:11] by the any s of property of a corporation by a person
[56:14] corporation by a person to be agent but without written
[56:17] to be agent but without written authority from the corporation is what
[56:21] authority from the corporation is what voidable or void
[56:32] let's see. Sige. Let's wait for the
[56:33] let's see. Sige. Let's wait for the answers of
[56:37] the rest of your classmates. Void. Mr.
[56:40] the rest of your classmates. Void. Mr. Earth is void. Voidan void. Void. Ang
[56:43] Earth is void. Voidan void. Void. Ang galing. Very good. Your answer is
[56:46] galing. Very good. Your answer is correct. Very good. Very good. Yan lang
[56:49] correct. Very good. Very good. Yan lang yung provision na void express kasi no.
[56:54] yung provision na void express kasi no. What's a statutory? It's in it's found
[56:57] What's a statutory? It's in it's found in the civil code
[57:00] in the civil code so yan lang. Okay. Basta pagdating sa
[57:03] so yan lang. Okay. Basta pagdating sa real property, walang authority ang
[57:06] real property, walang authority ang agent
[57:08] agent automatic void.
[57:11] automatic void. Okay. But if you notice in you know in
[57:14] Okay. But if you notice in you know in our cases, you know, in the previous
[57:15] our cases, you know, in the previous sessions mga contracts, mga ganyan, it's
[57:20] sessions mga contracts, mga ganyan, it's only voidable ' ba? Voidable lang siya.
[57:30] Power to mortgage real property. So it's
[57:34] Power to mortgage real property. So it's a keen to the power to sell properties.
[57:36] a keen to the power to sell properties. A special power of attorney is necessary
[57:39] A special power of attorney is necessary to create or convey real rights over a
[57:42] to create or convey real rights over a movable property. Furthermore, the
[57:44] movable property. Furthermore, the special power of attorney must appear in
[57:46] special power of attorney must appear in a public document.
[57:48] a public document. In the absence of a special power of
[57:50] In the absence of a special power of attorney, even the president of the
[57:53] attorney, even the president of the corporation cannot enter into a
[57:55] corporation cannot enter into a validage.
[58:03] The power to borrow money. The parrow to
[58:06] The power to borrow money. The parrow to borrow money is one of the cases, one of
[58:08] borrow money is one of the cases, one of those cases where corporate officers as
[58:11] those cases where corporate officers as agents of the corporation need a special
[58:14] agents of the corporation need a special power of
[58:16] power of attorney.
[58:21] Section 36 of the revised corporation
[58:23] Section 36 of the revised corporation code provides the power to extend or
[58:26] code provides the power to extend or shorten corporate term.
[58:29] shorten corporate term. Okay. Pero medyo ano na to no? Medyo
[58:32] Okay. Pero medyo ano na to no? Medyo hindi na rin to ganon cooperative
[58:34] hindi na rin to ganon cooperative because right now if you're going to
[58:37] because right now if you're going to incorporate a corporation business
[58:40] incorporate a corporation business entity
[58:42] entity it's going to have perpetual existence
[58:46] it's going to have perpetual existence already.
[58:48] already. Section 37 the power to increase or
[58:51] Section 37 the power to increase or decrease capital stock incur or create
[58:55] decrease capital stock incur or create incurre
[58:57] incurre bonded indodal
[59:03] provision
[59:09] just take note
[59:12] just take note from this section increase in subscribed
[59:15] from this section increase in subscribed capital
[59:17] capital and paid up capital is not covered.
[59:20] and paid up capital is not covered. Okay.
[59:33] So the operative word there is
[59:37] So the operative word there is subscribe. Okay?
[59:39] subscribe. Okay? Iba yun. Iba yung subscribe capital
[59:43] Iba yun. Iba yung subscribe capital stock, okay? And paid up capital sa
[59:45] stock, okay? And paid up capital sa authorized capital stock. Authorized
[59:48] authorized capital stock. Authorized capital stock kasi yan yung nakalagay sa
[59:51] capital stock kasi yan yung nakalagay sa articles of incorporation.
[59:54] articles of incorporation. So that's why you have to get um
[59:58] So that's why you have to get um stockholders
[01:00:00] stockholders um approval at least 23d of the
[01:00:03] um approval at least 23d of the outstanding capital stock at the
[01:00:06] outstanding capital stock at the stockholders.
[01:00:14] So just take note um for the increase or
[01:00:18] So just take note um for the increase or decrease of authorized capital stock the
[01:00:20] decrease of authorized capital stock the requirements is first it must be
[01:00:22] requirements is first it must be approved by a majority vote of the
[01:00:25] approved by a majority vote of the board.
[01:00:27] board. Second, approved by at least 23d of the
[01:00:30] Second, approved by at least 23d of the outstanding capital stock at the
[01:00:32] outstanding capital stock at the stockholders meeting July called for the
[01:00:34] stockholders meeting July called for the purpose. Third, a certificate signed by
[01:00:38] purpose. Third, a certificate signed by a majority of the directors of the
[01:00:41] a majority of the directors of the corporation encounter signed by the
[01:00:43] corporation encounter signed by the chairperson of the board and the
[01:00:45] chairperson of the board and the secretary of the corporation setting
[01:00:48] secretary of the corporation setting forth that the requirements found in
[01:00:50] forth that the requirements found in section 37 have been complied with the
[01:00:54] section 37 have been complied with the amount of the increase or decrease of
[01:00:56] amount of the increase or decrease of the capital stock. In case of an
[01:00:59] the capital stock. In case of an increase of the capital stock, the
[01:01:00] increase of the capital stock, the amount of capital stock of or number of
[01:01:03] amount of capital stock of or number of shares of no par stock there of actually
[01:01:06] shares of no par stock there of actually subscribe. The names, nationalities and
[01:01:09] subscribe. The names, nationalities and addresses of the person subscribed.
[01:01:13] addresses of the person subscribed. Amount of capital stock or or number of
[01:01:16] Amount of capital stock or or number of no par stocks subscribed by each and the
[01:01:20] no par stocks subscribed by each and the amount paid by each on the subscription
[01:01:23] amount paid by each on the subscription in cash or property.
[01:01:26] in cash or property. It must also include the amount of stock
[01:01:28] It must also include the amount of stock represented at the meeting and the vote
[01:01:32] represented at the meeting and the vote authorizing the increase or decrease of
[01:01:34] authorizing the increase or decrease of the capital stock.
[01:01:38] also be a treasur affidavit
[01:01:43] also be a treasur affidavit and approval of the amend articles
[01:01:46] and approval of the amend articles ofation by
[01:02:10] Take note
[01:02:12] Take note of the denial of the quiz in authorized
[01:02:16] of the denial of the quiz in authorized capital stock.
[01:02:19] The rule is that no decrease in capital
[01:02:23] The rule is that no decrease in capital stock shall be approved by the
[01:02:26] stock shall be approved by the commission
[01:02:28] commission SEC if its effect shall prejudice the
[01:02:31] SEC if its effect shall prejudice the rights of corporate creditors
[01:02:36] rights of corporate creditors otherwise known as this is this is also
[01:02:40] otherwise known as this is this is also pursuant to the trust fund doctrine.
[01:02:44] pursuant to the trust fund doctrine. Okay. is consistent with the trust fund
[01:02:47] Okay. is consistent with the trust fund doctrine. Trust fund doctrine if you
[01:02:50] doctrine. Trust fund doctrine if you recall provides that subscriptions to
[01:02:53] recall provides that subscriptions to the capital stock of a corporation
[01:02:56] the capital stock of a corporation constitute a fund to which the creditors
[01:03:00] constitute a fund to which the creditors have a right to look for the
[01:03:01] have a right to look for the satisfaction of their claims.
[01:03:04] satisfaction of their claims. A stockholder has no right to demand for
[01:03:07] A stockholder has no right to demand for the return of his investment. His
[01:03:09] the return of his investment. His investment is locked in until
[01:03:12] investment is locked in until liquidation of the corporation. A
[01:03:15] liquidation of the corporation. A stockholder cannot without violating the
[01:03:18] stockholder cannot without violating the trust fund doctrine compel the
[01:03:20] trust fund doctrine compel the corporation to return his investments
[01:03:23] corporation to return his investments without the consent of all the
[01:03:25] without the consent of all the stockholders. Neither does he have the
[01:03:27] stockholders. Neither does he have the right to withdraw even when all stock
[01:03:29] right to withdraw even when all stock holders assent if it will prejudice the
[01:03:33] holders assent if it will prejudice the creditors.
[01:03:38] What is the rational? The rational is
[01:03:42] What is the rational? The rational is this. Okay.
[01:03:45] this. Okay. Uh if you will allow this from happening
[01:03:50] Uh if you will allow this from happening it will uh cause the depletion
[01:03:54] it will uh cause the depletion by
[01:03:56] by a corporation of its assets and
[01:03:59] a corporation of its assets and therefore the impairment of its capital
[01:04:02] therefore the impairment of its capital needed for the protection of
[01:04:09] a possibility of
[01:04:14] Why?
[01:04:16] Why? Uh like uh what we've been trying and
[01:04:19] Uh like uh what we've been trying and what we've been trying to avoid the
[01:04:21] what we've been trying to avoid the investments,
[01:04:23] investments, right?
[01:04:26] Ah okay. Meron kang um investment sa
[01:04:30] Ah okay. Meron kang um investment sa corporation ' ba. For example, pasok ka
[01:04:34] corporation ' ba. For example, pasok ka ng 1,000, alam m nalulugi na ng
[01:04:37] ng 1,000, alam m nalulugi na ng corporation,
[01:04:39] corporation, in-approve mo yung ah decrease of
[01:04:42] in-approve mo yung ah decrease of authorized capital stock, ibig sabihin
[01:04:44] authorized capital stock, ibig sabihin pwede mong babaan yung pwede pwede kang
[01:04:47] pwede mong babaan yung pwede pwede kang magtanggal ng investment.
[01:04:49] magtanggal ng investment. Pero during the operations of the
[01:04:51] Pero during the operations of the business of a corporation,
[01:04:54] business of a corporation, meron siyang mga kontrata with creditors
[01:04:56] meron siyang mga kontrata with creditors from suppliers. Okay. Sinong affected
[01:05:01] from suppliers. Okay. Sinong affected ag hindi maka sinong affected? Syempre
[01:05:03] ag hindi maka sinong affected? Syempre ang creditors ng corporation ba bababa
[01:05:06] ang creditors ng corporation ba bababa yung capital ng business eh. De-decrease
[01:05:12] yung capital ng business eh. De-decrease mo yung
[01:05:14] mo yung yung yung capital ng business, yung
[01:05:17] yung yung capital ng business, yung assets niya. Wwit ka.
[01:05:22] assets niya. Wwit ka. It will be a it will be a cost for
[01:05:24] It will be a it will be a cost for possible.
[01:05:27] possible. Right? Later on napakadali mag ano
[01:05:31] Right? Later on napakadali mag ano magtakbo ng ng ano pera kung ganon. Bu
[01:05:35] magtakbo ng ng ano pera kung ganon. Bu you have um corporate
[01:05:39] you have um corporate corporation has its own separate
[01:05:40] corporation has its own separate juridical personality right hindi ka
[01:05:44] juridical personality right hindi ka mahihirapan kang maghabol
[01:05:47] mahihirapan kang maghabol ng pera
[01:05:49] ng pera kapag
[01:05:51] kapag especially if it's done maliciously
[01:05:53] especially if it's done maliciously by the stockholders of a corporation.
[01:05:57] by the stockholders of a corporation. ba magwi-withdraw lang sila ng ng
[01:05:59] ba magwi-withdraw lang sila ng ng kanilang investments babawasan yung
[01:06:02] kanilang investments babawasan yung assets ng corporation tatakbuhan
[01:06:05] assets ng corporation tatakbuhan okay that is that is why the rule is
[01:06:08] okay that is that is why the rule is that
[01:06:10] that um the decrease of the authorized
[01:06:12] um the decrease of the authorized capital stock must not impir
[01:06:15] capital stock must not impir the rights of the creditors. So paano
[01:06:18] the rights of the creditors. So paano iyan ino-operationalize? So sa mga
[01:06:21] iyan ino-operationalize? So sa mga accountants, I think you can explain
[01:06:23] accountants, I think you can explain this. Pero um there's such a thing as I
[01:06:27] this. Pero um there's such a thing as I think um
[01:06:30] think um iyung
[01:06:32] iyung liability to uh assets ratio
[01:06:37] liability to uh assets ratio okay of a company. So if that will be
[01:06:40] okay of a company. So if that will be affected ibig sabihin if by decreasing
[01:06:43] affected ibig sabihin if by decreasing the assets of a corporation tataas lang
[01:06:46] the assets of a corporation tataas lang yung yung liabilities mo in such a way
[01:06:50] yung yung liabilities mo in such a way na hindi ka na makakapagbayad.
[01:06:53] na hindi ka na makakapagbayad. Wala ka ng wala ng then yung cash flow
[01:06:56] Wala ka ng wala ng then yung cash flow ng company no it's not earning.
[01:06:59] ng company no it's not earning. Then that would mean obviously mean on
[01:07:01] Then that would mean obviously mean on the part of the SEC that this should SEC
[01:07:05] the part of the SEC that this should SEC will not allow that to happen. The SEC
[01:07:07] will not allow that to happen. The SEC will review your financial statements.
[01:07:10] will review your financial statements. SC will look at your books and say na
[01:07:11] SC will look at your books and say na hindi meron ka pang utang sa mga
[01:07:14] hindi meron ka pang utang sa mga creditors mo. Hindi mo pa pwedeng hindi
[01:07:17] creditors mo. Hindi mo pa pwedeng hindi ka pa pwedeng mag-decrease ng authorized
[01:07:19] ka pa pwedeng mag-decrease ng authorized capital stock.
[01:07:21] capital stock. So the SEC has that power to review your
[01:07:23] So the SEC has that power to review your financial stats. That's why on a yearly
[01:07:25] financial stats. That's why on a yearly basis you're required to submit your GIS
[01:07:29] basis you're required to submit your GIS audited financial stat.
[01:07:49] So similarly you have requirements for
[01:07:53] So similarly you have requirements for creation and increase
[01:07:56] creation and increase of bonded indebtedness.
[01:07:59] of bonded indebtedness. So medyo the same lang sila ng
[01:08:00] So medyo the same lang sila ng requirements ano
[01:08:02] requirements ano it must also the bonds must be
[01:08:05] it must also the bonds must be registered with the SEC
[01:08:09] registered with the SEC power to deny preemptive right. This is
[01:08:11] power to deny preemptive right. This is found under section 38. All stockholders
[01:08:14] found under section 38. All stockholders of a stock corporation
[01:08:18] of a stock corporation shall enjoy preemptive right to
[01:08:20] shall enjoy preemptive right to subscribe to all issues or disposition
[01:08:24] subscribe to all issues or disposition of shares of any class in proportion to
[01:08:27] of shares of any class in proportion to their respective holdings unless such
[01:08:30] their respective holdings unless such right is denied by the articles or an
[01:08:33] right is denied by the articles or an amendment or two provided that such
[01:08:36] amendment or two provided that such preemptive right shall not extend to
[01:08:39] preemptive right shall not extend to shares issued in compliance with laws
[01:08:42] shares issued in compliance with laws requiring
[01:08:43] requiring stock offerings minimum stock owners by
[01:08:46] stock offerings minimum stock owners by the shares issued in good faith with the
[01:08:50] the shares issued in good faith with the approval of the stockholders
[01:08:53] approval of the stockholders 23d of the outstanding capital stock in
[01:08:57] 23d of the outstanding capital stock in exchange for property needed for
[01:08:59] exchange for property needed for corporate purposes or in payment of a
[01:09:02] corporate purposes or in payment of a previously contracted debt
[01:09:06] previously contracted debt what is the purpose underlying purpose
[01:09:08] what is the purpose underlying purpose of section 38
[01:09:12] of section 38 to um
[01:09:15] to um well the purpose or the or the
[01:09:17] well the purpose or the or the underlying basis of the preemptive right
[01:09:19] underlying basis of the preemptive right is to preserve two basic rights
[01:09:23] is to preserve two basic rights shareholders first political rights the
[01:09:26] shareholders first political rights the right to vote which includes control and
[01:09:29] right to vote which includes control and management of the corporation second
[01:09:33] management of the corporation second financial rights which includes the
[01:09:36] financial rights which includes the right to a share in the profits through
[01:09:39] right to a share in the profits through dividends may be in the form of cash,
[01:09:42] dividends may be in the form of cash, property or stock.
[01:09:45] property or stock. So in other words, this is the right to
[01:09:48] So in other words, this is the right to share in the residual assets after
[01:09:50] share in the residual assets after liquidation.
[01:09:54] Recall the general rule all stockholders
[01:09:57] Recall the general rule all stockholders of a stock corporation shall enjoy
[01:10:02] of a stock corporation shall enjoy preemptive right toscri all issues or
[01:10:06] preemptive right toscri all issues or disposition of shares of any class
[01:10:10] disposition of shares of any class in proportion to their respective
[01:10:13] in proportion to their respective shareholdings. So the the operative
[01:10:16] shareholdings. So the the operative clause is in proportion to the
[01:10:19] clause is in proportion to the respective shareholdings.
[01:10:22] respective shareholdings. So if your the percentage percentage of
[01:10:25] So if your the percentage percentage of your shareholdings now is only for
[01:10:27] your shareholdings now is only for example 10%
[01:10:30] example 10% okay can only buy as much as 10%
[01:10:35] okay can only buy as much as 10% right
[01:10:37] right not in excess of that okay so for
[01:10:39] not in excess of that okay so for example ang binebenta na dini-dispose na
[01:10:44] example ang binebenta na dini-dispose na shares of stock ng isang um shareholder
[01:10:47] shares of stock ng isang um shareholder is around 40%
[01:10:50] is around 40% okay you can only buy 10% per of that
[01:10:52] okay you can only buy 10% per of that amount the amount of that
[01:10:57] yun ang ibig sabihin
[01:11:00] yun ang ibig sabihin exceptions preemptive right is not
[01:11:03] exceptions preemptive right is not available in the following instances
[01:11:06] available in the following instances when such right is denied by the
[01:11:08] when such right is denied by the articles of incorporation
[01:11:10] articles of incorporation first second when shares are issued in
[01:11:15] first second when shares are issued in compliance with loss requiring stock
[01:11:17] compliance with loss requiring stock offerings or minimum stock ownership by
[01:11:20] offerings or minimum stock ownership by the public.
[01:11:23] the public. Okay. Anong ano yan attorney? Anyone
[01:11:26] Okay. Anong ano yan attorney? Anyone knows who's familiar with um
[01:11:29] knows who's familiar with um um
[01:11:33] IPOs initial public offerings?
[01:11:37] IPOs initial public offerings? So sa initial public offerings,
[01:11:40] So sa initial public offerings, okay um if nag-agree na yung company na
[01:11:44] okay um if nag-agree na yung company na they're going to enter into an IPO,
[01:11:47] they're going to enter into an IPO, okay understood na yan among all
[01:11:50] okay understood na yan among all stockholders na okay
[01:11:53] stockholders na okay importante to sa atin we need to get
[01:11:55] importante to sa atin we need to get funds from the public so we're going to
[01:11:58] funds from the public so we're going to offer pairs of stock
[01:12:01] offer pairs of stock understood na yun um napagdecided na yan
[01:12:05] understood na yun um napagdecided na yan ng board napagdecided ng stock holders
[01:12:07] ng board napagdecided ng stock holders na okay we have to do this we need
[01:12:10] na okay we have to do this we need financing
[01:12:12] financing okay
[01:12:14] okay stock exchange or entering into
[01:12:17] stock exchange or entering into participating in the stock exchange is a
[01:12:19] participating in the stock exchange is a form of corporate financing
[01:12:23] form of corporate financing Why?
[01:12:25] Why? You probably have a project or a plan
[01:12:29] You probably have a project or a plan and you need you're in need of money but
[01:12:31] and you need you're in need of money but you don't want to get loan from the
[01:12:33] you don't want to get loan from the back.
[01:12:35] back. So your option is your other option is
[01:12:38] So your option is your other option is you go through an IPO initial public
[01:12:41] you go through an IPO initial public offering. You get funds from the public
[01:12:44] offering. You get funds from the public you sell shares of stock.
[01:12:48] So magkakaroon na ng public ownership.
[01:12:50] So magkakaroon na ng public ownership. So that's why you have publicly listed
[01:12:53] So that's why you have publicly listed companies.
[01:12:57] Um
[01:13:00] minimum stock ownership. So there are
[01:13:02] minimum stock ownership. So there are certain
[01:13:05] certain uh industries that require minimum stock
[01:13:08] uh industries that require minimum stock ownership by the public.
[01:13:11] ownership by the public. So kung ganon kung ang issuance ng
[01:13:13] So kung ganon kung ang issuance ng shares is in compliance with a minimum
[01:13:16] shares is in compliance with a minimum stock ownership
[01:13:18] stock ownership rule uh then you cannot exercise a
[01:13:22] rule uh then you cannot exercise a preemptive right if you're a
[01:13:24] preemptive right if you're a stockholder.
[01:13:27] stockholder. Third, when shares are issued in good
[01:13:29] Third, when shares are issued in good faith with the approval of the
[01:13:31] faith with the approval of the stockholders representing 23d of the
[01:13:34] stockholders representing 23d of the outstanding capital stock,
[01:13:37] outstanding capital stock, take note in exchange for property
[01:13:40] take note in exchange for property needed for corporate purposes or in
[01:13:43] needed for corporate purposes or in payment of a previously contracted pet.
[01:13:48] payment of a previously contracted pet. So in such a case
[01:13:51] So in such a case you will be denied of your preemptive
[01:13:53] you will be denied of your preemptive right.
[01:13:55] right. Okay. So approved ng board 23ds ratified
[01:13:58] Okay. So approved ng board 23ds ratified ng stock holders and ang purpose niya is
[01:14:03] ng stock holders and ang purpose niya is it's for corporate expansion
[01:14:06] it's for corporate expansion or impayment of a previously contracted
[01:14:09] or impayment of a previously contracted them. So ano itong second circumstance
[01:14:12] them. So ano itong second circumstance na to? Again this is pursu to trust
[01:14:15] na to? Again this is pursu to trust funducted. Okay.
[01:14:25] Problem.
[01:14:30] Yeah.
[01:14:36] So check your chat box. Let me see your
[01:14:39] So check your chat box. Let me see your answers.
[01:15:37] Mm. Hag niyo na i-chat. Yes or ang sagot
[01:15:40] Mm. Hag niyo na i-chat. Yes or ang sagot lang? Yes or no? May the board do so.
[01:15:48] Ba okay. Oh yes.
[01:15:55] What is the rule sa preemptive right?
[01:15:59] What is the rule sa preemptive right? What is the rule?
[01:16:05] The general rule. All stockholders
[01:16:08] The general rule. All stockholders shall enjoy
[01:16:11] shall enjoy preemptive right. Ba yun ang general
[01:16:14] preemptive right. Ba yun ang general rule except yung mga situations na
[01:16:18] rule except yung mga situations na na-mention ko. Tatlo ba. First again
[01:16:21] na-mention ko. Tatlo ba. First again uulitin na natin ha. and it's denied by
[01:16:23] uulitin na natin ha. and it's denied by the articles. Second, issued in
[01:16:25] the articles. Second, issued in compliance with loss requiring minimum
[01:16:27] compliance with loss requiring minimum stock ownership or um stock offerings.
[01:16:31] stock ownership or um stock offerings. Third, third, if it's for a corporate
[01:16:35] Third, third, if it's for a corporate for corporate expansion or payment of a
[01:16:37] for corporate expansion or payment of a contracted debt
[01:16:40] contracted debt pero approved ng
[01:16:43] pero approved ng and
[01:16:46] and stockholders.
[01:16:49] Inapprove ba ng stock holders?
[01:16:53] Hindi.
[01:16:56] Hindi. Oh, hindi siya nag-comply sa exception
[01:17:01] Oh, hindi siya nag-comply sa exception ' ba? That means the answer is no. The
[01:17:06] ' ba? That means the answer is no. The poard cannot do so.
[01:17:08] poard cannot do so. It has to comply with the requirements
[01:17:12] It has to comply with the requirements of the law right on the law on the power
[01:17:18] of the law right on the law on the power to deny preemptive right. Kaya nga if
[01:17:21] to deny preemptive right. Kaya nga if you look at the wording of section 38
[01:17:23] you look at the wording of section 38 the wording is power to deny preemptive
[01:17:27] the wording is power to deny preemptive right because the rule is there is such
[01:17:31] right because the rule is there is such a thing as a preemptive right.
[01:17:33] a thing as a preemptive right. It is incumbent upon the corporation
[01:17:37] It is incumbent upon the corporation to follow
[01:17:41] the strictly no the requirements under
[01:17:44] the strictly no the requirements under section 38.
[01:17:47] section 38. So uh there will be a denial of the pre
[01:17:54] take note section 38 does not
[01:17:57] take note section 38 does not distinguish and states that stockholder
[01:18:00] distinguish and states that stockholder shall enjoy a preemptive right to
[01:18:03] shall enjoy a preemptive right to subscribe to all issues or disposition
[01:18:07] subscribe to all issues or disposition of shares of any class. Okay? It is
[01:18:11] of shares of any class. Okay? It is available to unissued or unsubscribed
[01:18:14] available to unissued or unsubscribed shares. So ibig sabihin mga new
[01:18:16] shares. So ibig sabihin mga new issuances
[01:18:18] issuances it's also um
[01:18:24] applicable to unissued shares as a
[01:18:27] applicable to unissued shares as a result of an increase in the authorized
[01:18:29] result of an increase in the authorized capital stock.
[01:18:32] capital stock. Okay.
[01:19:01] problem
[01:19:06] tayo ano ngayon
[01:19:10] tayo ano ngayon problem
[01:19:23] ngayon naman let's give it some twist
[01:19:26] ngayon naman let's give it some twist let's hear from some but don't worry it
[01:19:29] let's hear from some but don't worry it won
[01:19:31] won Okay.
[01:19:38] I open it up for volunteers
[01:19:41] I open it up for volunteers to recite
[01:19:44] to recite the straightforward answer and probably
[01:19:47] the straightforward answer and probably one sentence.
[01:20:47] Oh sige na. Walang volunteers.
[01:20:52] Grabe naman kayo.
[01:21:01] Volunteers. Salamat.
[01:21:07] Wala pa akong sumasagot sa chat.
[01:21:14] O
[01:21:16] O sige, I'll ask Mr. Calabia. Mr. Calabia,
[01:21:20] sige, I'll ask Mr. Calabia. Mr. Calabia, what do you think?
[01:21:26] Sige
[01:21:28] Sige you give me your best shot, Mr. Calabia.
[01:21:41] Ah good evening po. Masanay kayo sa
[01:21:43] Ah good evening po. Masanay kayo sa situational mga ganitong ganitong tanong
[01:21:46] situational mga ganitong ganitong tanong para masanay kayo paano sagutin.
[01:21:56] Ah my answer po attorney is yes po. Mr.
[01:22:00] Ah my answer po attorney is yes po. Mr. He has a a preemptive right to subscribe
[01:22:03] He has a a preemptive right to subscribe to a proportionate portion of the
[01:22:05] to a proportionate portion of the remaining 10,000 shares and he must
[01:22:07] remaining 10,000 shares and he must exercise this right within the period
[01:22:10] exercise this right within the period fixed by the board of directors or in
[01:22:12] fixed by the board of directors or in its absence within a reasonable time po.
[01:22:15] its absence within a reasonable time po. >> Okay, correct. Very good.
[01:22:19] >> Okay, correct. Very good. Thank you, Mr. Calabia.
[01:22:29] To take note this right is
[01:22:33] To take note this right is um cannot you know cannot just simply be
[01:22:36] um cannot you know cannot just simply be cannot simply be waved okay a
[01:22:38] cannot simply be waved okay a stockholder
[01:22:40] stockholder who neither desires nor intends to buy
[01:22:44] who neither desires nor intends to buy any of the stocks being offered.
[01:22:47] any of the stocks being offered. Okay,
[01:22:49] Okay, I'm sorry. What did Okay. So since this
[01:22:51] I'm sorry. What did Okay. So since this is a personal right, it's wavable. Okay.
[01:22:56] is a personal right, it's wavable. Okay. That means a stockholder who does not
[01:22:59] That means a stockholder who does not who decides to forgo
[01:23:04] who decides to forgo uh his or her preemptive rights. Okay.
[01:23:07] uh his or her preemptive rights. Okay. Then obviously he may wave such right in
[01:23:10] Then obviously he may wave such right in which event the shares may be offered to
[01:23:13] which event the shares may be offered to any interest
[01:23:16] any interest acceptable to the corporation.
[01:23:21] The right to subscribe to new issues and
[01:23:23] The right to subscribe to new issues and disposition may be transferred by the
[01:23:26] disposition may be transferred by the shareholder.
[01:23:29] Unless there is an express restriction
[01:23:31] Unless there is an express restriction in the articles of incorporation, the
[01:23:34] in the articles of incorporation, the preemptive right is transferable.
[01:23:40] And any questions with respect to
[01:23:42] And any questions with respect to preemptive right? Medyo nage-gets na
[01:23:44] preemptive right? Medyo nage-gets na yung concept niya. So tandaan niyo lang
[01:23:47] yung concept niya. So tandaan niyo lang if stockholder ka na ng corporation
[01:23:51] at pag mag-i-issue ng panibagong shares
[01:23:54] at pag mag-i-issue ng panibagong shares ibig sabihin
[01:23:57] ibig sabihin primary market. Okay? Ito yung mga mga
[01:23:59] primary market. Okay? Ito yung mga mga terms na to ng sa investment terms na
[01:24:01] terms na to ng sa investment terms na to. Primary market and secondary market.
[01:24:06] to. Primary market and secondary market. Secondary market yan yung tine-trade na
[01:24:09] Secondary market yan yung tine-trade na sa stock exchange. Okay.
[01:24:13] sa stock exchange. Okay. Primary market ito yung hindi pa
[01:24:16] Primary market ito yung hindi pa nai-issue
[01:24:18] nai-issue ng corporation.
[01:24:20] ng corporation. Bakit na siguro nagtataka kayo? Bakit?
[01:24:23] Bakit na siguro nagtataka kayo? Bakit? Ano pa yung hindi nai-issue? Possible
[01:24:25] Ano pa yung hindi nai-issue? Possible kasi na kunyari ang nakalagay ng
[01:24:28] kasi na kunyari ang nakalagay ng authorized capital stock mo sa articles
[01:24:30] authorized capital stock mo sa articles mo is for example 1 million.
[01:24:32] mo is for example 1 million. At ang nag-subscribe lang dito, ibig
[01:24:34] At ang nag-subscribe lang dito, ibig sabihin, subscribe and paid yung yung
[01:24:38] sabihin, subscribe and paid yung yung yung talagang may capital is around half
[01:24:41] yung talagang may capital is around half of it. So for example, 500,000. So ibig
[01:24:44] of it. So for example, 500,000. So ibig sabihin may 500,000 pa na pwedeng ipasok
[01:24:49] sabihin may 500,000 pa na pwedeng ipasok sa corporation ' ba? Kasi yun ang
[01:24:52] sa corporation ' ba? Kasi yun ang authorized ka eh. 'Di ba? 'Yun 'yung
[01:24:55] authorized ka eh. 'Di ba? 'Yun 'yung authorized ka ng SEC.
[01:24:58] authorized ka ng SEC. Pwede mong pwede kang as much as Php
[01:25:01] Pwede mong pwede kang as much as Php million
[01:25:04] million ba but for some reason
[01:25:08] ba but for some reason yung capital lang na pumasok sayo mga
[01:25:10] yung capital lang na pumasok sayo mga investors mga incorporators 500 lang
[01:25:13] investors mga incorporators 500 lang yung pera eh hanggang doun ka lang okay
[01:25:17] yung pera eh hanggang doun ka lang okay para para makapag conduct ka ng business
[01:25:20] para para makapag conduct ka ng business mo. But meron ka pang addition pwede ka
[01:25:24] mo. But meron ka pang addition pwede ka pang tumaas hanggang 1 million. So yun
[01:25:27] pang tumaas hanggang 1 million. So yun panibagong shares of stock yun issue
[01:25:30] panibagong shares of stock yun issue ones. Now for the existing shareholders,
[01:25:35] ones. Now for the existing shareholders, stockholders
[01:25:37] stockholders you want to preserve
[01:25:40] you want to preserve as much as possible. You want to
[01:25:42] as much as possible. You want to preserve your control
[01:25:46] preserve your control over the corporation.
[01:25:48] over the corporation. Yun yung kagandahan ng preemptive right
[01:25:52] Yun yung kagandahan ng preemptive right kasi for example
[01:25:54] kasi for example ba ako tayo this entire class we are
[01:25:59] ba ako tayo this entire class we are stockholders of a corporation all of us
[01:26:02] stockholders of a corporation all of us pay equally equal shares tapos
[01:26:05] pay equally equal shares tapos mag-i-issue tayo ng panibagong shares
[01:26:08] mag-i-issue tayo ng panibagong shares 'di ba issue tayo ng panibagong shares
[01:26:13] 'di ba issue tayo ng panibagong shares kasi kailangan natin ng pera ngayon
[01:26:16] kasi kailangan natin ng pera ngayon assuming na Si kunyari si Mr. Nasional
[01:26:20] assuming na Si kunyari si Mr. Nasional ay 'yung pinakamayaman sa ating lahat at
[01:26:24] ay 'yung pinakamayaman sa ating lahat at gusto niyang i-subscribe
[01:26:27] gusto niyang i-subscribe yung remaining 500,000.
[01:26:32] Kaya ba niyang i-subscribe yung buong
[01:26:34] Kaya ba niyang i-subscribe yung buong 500,000?
[01:26:38] Ano ang ano ang ano ang nakalagay sa
[01:26:40] Ano ang ano ang ano ang nakalagay sa code?
[01:26:43] code? In
[01:26:45] In proportion only. So remember equal ' ba
[01:26:49] proportion only. So remember equal ' ba equal tayo. So hindi niya makukuha yung
[01:26:51] equal tayo. So hindi niya makukuha yung buong 500,000 kahit na napakadami ng
[01:26:55] buong 500,000 kahit na napakadami ng pera ' ba
[01:26:59] pera ' ba kasi hanggang doun ka lang eh.
[01:27:02] kasi hanggang doun ka lang eh. Yun naman ang kagandahan ng preemptive
[01:27:04] Yun naman ang kagandahan ng preemptive right ' ba?
[01:27:08] right ' ba? Yun ang kagandahan ng preemptive right.
[01:27:10] Yun ang kagandahan ng preemptive right. Hindi totoo ang nasa drama attorney.
[01:27:12] Hindi totoo ang nasa drama attorney. Bakit? Ano ang nasa drama ni Pedro?
[01:27:16] Bakit? Ano ang nasa drama ni Pedro? Hindi ko po alam yun ma'am.
[01:27:20] Hindi ko po alam yun ma'am. No attorne sometimes you see in dramas
[01:27:23] No attorne sometimes you see in dramas all of a sudden transfer na lahat ng
[01:27:25] all of a sudden transfer na lahat ng >> ah yes yes
[01:27:28] >> ah yes yes because if you're existing stockholder
[01:27:33] because if you're existing stockholder okay you're only allowed to okay
[01:27:37] okay you're only allowed to okay exercise a preemptive right but you're
[01:27:39] exercise a preemptive right but you're only allowed to buy to a certain amount
[01:27:42] only allowed to buy to a certain amount lang for example assuming ha ilan tayo
[01:27:45] lang for example assuming ha ilan tayo 40 so mr national is equally divided 'di
[01:27:49] 40 so mr national is equally divided 'di ba? So one out one 1 over 40 lang 'di
[01:27:54] ba? So one out one 1 over 40 lang 'di ba? Ganun lang ang kaya niyang pwede
[01:27:58] ba? Ganun lang ang kaya niyang pwede niyang bilhin kahit na
[01:28:01] niyang bilhin kahit na napakadami niyang datong 'di ba Mr.
[01:28:04] napakadami niyang datong 'di ba Mr. national.
[01:28:07] So
[01:28:09] So um
[01:28:12] in a way um in certain in other
[01:28:15] in a way um in certain in other instances it's also a mechanism wherein
[01:28:20] instances it's also a mechanism wherein stockholders
[01:28:21] stockholders retain control of their corporation of
[01:28:24] retain control of their corporation of of the corporations for example um
[01:28:29] of the corporations for example um 20 tig to 20% ng lima ba and they want
[01:28:33] 20 tig to 20% ng lima ba and they want to make sure that um while they offer
[01:28:36] to make sure that um while they offer new issuances they want to make sure na
[01:28:39] new issuances they want to make sure na for example um okay
[01:28:42] for example um okay I'm sorry so ganitong example so for
[01:28:44] I'm sorry so ganitong example so for example 60 um 60% of a corporation is
[01:28:48] example 60 um 60% of a corporation is owned by um one corporation and then the
[01:28:51] owned by um one corporation and then the rest is parang separate individuals na
[01:28:55] rest is parang separate individuals na so if in the event the corporation uh
[01:28:59] so if in the event the corporation uh for example um issues new shares of
[01:29:02] for example um issues new shares of stock okay so ibig sabihin Yan kuha na
[01:29:05] stock okay so ibig sabihin Yan kuha na sila ng bagong finanse. May bagong pera
[01:29:07] sila ng bagong finanse. May bagong pera papasok ' ba.
[01:29:10] papasok ' ba. Si Major si ah yung yung 60% owner can
[01:29:16] Si Major si ah yung yung 60% owner can only buy up to 60%. So in effect he
[01:29:19] only buy up to 60%. So in effect he retains that 60%
[01:29:21] retains that 60% 'di ba? He retains that 60% ownership of
[01:29:24] 'di ba? He retains that 60% ownership of the corporation.
[01:29:27] the corporation. So
[01:29:28] So hindi siya na-dilute
[01:29:31] hindi siya na-dilute ibig sabihin non, ibig sabihin non yung
[01:29:34] ibig sabihin non, ibig sabihin non yung control niya sa corporation remains the
[01:29:38] control niya sa corporation remains the same.
[01:29:41] same. So kahit na mag-issue at mag-issue ka ng
[01:29:43] So kahit na mag-issue at mag-issue ka ng panibagong
[01:29:45] panibagong of stock,
[01:29:47] of stock, ganun pa rin yung control
[01:29:51] ganun pa rin yung control ng 60%
[01:29:53] ng 60% majority owner. Hindi magbabago as long
[01:29:56] majority owner. Hindi magbabago as long as exercises the ba. So ibig sabihin
[01:30:00] as exercises the ba. So ibig sabihin hindi siya mada-dilute kasi for example
[01:30:02] hindi siya mada-dilute kasi for example okay 60% owner ka pero pwede naman kasi
[01:30:05] okay 60% owner ka pero pwede naman kasi yung board of ba investor ka lang eh
[01:30:08] yung board of ba investor ka lang eh hindi ka you don't you don't umle with
[01:30:12] hindi ka you don't you don't umle with the with the operations of the business
[01:30:14] the with the operations of the business right so you leave it to management so
[01:30:16] right so you leave it to management so you just investor right but um in a way
[01:30:21] you just investor right but um in a way since you own 60% of the business may
[01:30:24] since you own 60% of the business may influence ka pa rin kung sinong boboto
[01:30:26] influence ka pa rin kung sinong boboto sa board so Um you want to retain that
[01:30:32] sa board so Um you want to retain that control and influence over the
[01:30:34] control and influence over the corporation. Okay? So what you do, you
[01:30:37] corporation. Okay? So what you do, you exercise preid right para yung 60% ka pa
[01:30:40] exercise preid right para yung 60% ka pa rin hindi ka mada-dilute.
[01:30:43] rin hindi ka mada-dilute. Nangyayari kasi yan na biglang merong
[01:30:46] Nangyayari kasi yan na biglang merong for example ah investor
[01:30:50] for example ah investor na malaki lalapit.
[01:30:53] na malaki lalapit. Hoy Mr. Ano? Mr. X may pera ako. Gusto
[01:30:57] Hoy Mr. Ano? Mr. X may pera ako. Gusto ko bilhin business mo.
[01:31:00] ko bilhin business mo. Okay. I have for example Php1 billion
[01:31:05] Okay. I have for example Php1 billion going to buy your business.
[01:31:08] going to buy your business. Okay. Papasok siya ngayon. Okay. Hindi
[01:31:12] Okay. Papasok siya ngayon. Okay. Hindi alam ng mga ibang ibang stockholders
[01:31:14] alam ng mga ibang ibang stockholders ba hindi nila alam yan. Okay.
[01:31:18] ba hindi nila alam yan. Okay. Ngayon all of a sudden biglang nagkaroon
[01:31:20] Ngayon all of a sudden biglang nagkaroon na ng kontrata ah.
[01:31:23] na ng kontrata ah. Nagkakaroon na ng stock purchase
[01:31:24] Nagkakaroon na ng stock purchase agreement ah. Nagkakaroon na ng mga
[01:31:26] agreement ah. Nagkakaroon na ng mga ganitong meetings.
[01:31:29] ganitong meetings. Okay? Tapos um tinatrabaho na ng board
[01:31:32] Okay? Tapos um tinatrabaho na ng board tapos mag in-approve na ng board. Pero
[01:31:35] tapos mag in-approve na ng board. Pero syempre a-approve pa ng stock holders ba
[01:31:38] syempre a-approve pa ng stock holders ba a-approve mo na ng stock holders if
[01:31:40] a-approve mo na ng stock holders if magkakaroon ng um
[01:31:45] papaalam nila if merong gustong mag
[01:31:48] papaalam nila if merong gustong mag invest sa corporation ba because it will
[01:31:50] invest sa corporation ba because it will necessarily dilute them. Now
[01:31:55] necessarily dilute them. Now once that notice the shareholders are
[01:31:57] once that notice the shareholders are sent
[01:31:59] sent they can now exercise
[01:32:01] they can now exercise the the empty drie.
[01:32:03] the the empty drie. Okay. Pwede na nilang for example, okay
[01:32:07] Okay. Pwede na nilang for example, okay teka, may 1 billion na papasok pero teka
[01:32:11] teka, may 1 billion na papasok pero teka tatap tatapatan ko yan. Okay? Para
[01:32:14] tatap tatapatan ko yan. Okay? Para ma-retain ko yung
[01:32:16] ma-retain ko yung ah control and yung percentage cost
[01:32:19] ah control and yung percentage cost corporation. That's possible. That's the
[01:32:22] corporation. That's possible. That's the preference given to the existing stock.
[01:32:27] preference given to the existing stock. Okay. So I hope you you understand now
[01:32:31] Okay. So I hope you you understand now the purpose and uh um uh terminology and
[01:32:37] the purpose and uh um uh terminology and as well as the the conditionalities
[01:32:39] as well as the the conditionalities behind uh the preempty thread.
[01:32:44] How similar is this with the right of
[01:32:46] How similar is this with the right of first refusal? Kaiba siya. Okay.
[01:32:51] first refusal? Kaiba siya. Okay. The general rule is that corporate
[01:32:54] The general rule is that corporate chairs are freely transferable and does
[01:32:56] chairs are freely transferable and does not need the consent of other
[01:32:58] not need the consent of other stockholders. Exception the articles of
[01:33:01] stockholders. Exception the articles of incorporation may provide a right of
[01:33:04] incorporation may provide a right of first refusal to stockholders
[01:33:07] first refusal to stockholders as a limitation on transfer.
[01:33:11] as a limitation on transfer. For example, the articles of
[01:33:13] For example, the articles of incorporation may provide that any
[01:33:15] incorporation may provide that any stockholder
[01:33:17] stockholder who intends to sell his or her share
[01:33:20] who intends to sell his or her share must first offer the same to the other
[01:33:24] must first offer the same to the other stockholders who are given a period of
[01:33:26] stockholders who are given a period of time to purchase the share. The right of
[01:33:29] time to purchase the share. The right of first refusal may also be based purely
[01:33:32] first refusal may also be based purely on contract.
[01:33:36] So
[01:33:38] So o ngayon na magkaiba na siya ba. So weve
[01:33:41] o ngayon na magkaiba na siya ba. So weve going to explain this ha. Yung
[01:33:43] going to explain this ha. Yung preemptive right that is for unissued
[01:33:46] preemptive right that is for unissued shares.
[01:33:48] shares. Na-mention ko kanina primary market
[01:33:51] Na-mention ko kanina primary market ba ilalabas mo pa lang sa public mag-ipo
[01:33:56] ba ilalabas mo pa lang sa public mag-ipo ka ng additional shares or may biglang
[01:34:00] ka ng additional shares or may biglang may biglang investor na gustong pumasok
[01:34:03] may biglang investor na gustong pumasok tapos meron ka pang authorized capital
[01:34:06] tapos meron ka pang authorized capital stock. So sakto pwede may issued chest
[01:34:09] stock. So sakto pwede may issued chest mag-i-issue ka ng panibago.
[01:34:13] mag-i-issue ka ng panibago. Diyan papasok preemptive right. Ngayon
[01:34:16] Diyan papasok preemptive right. Ngayon if existing na na ibig sabihin naissue
[01:34:19] if existing na na ibig sabihin naissue na 'yung shares.
[01:34:23] Naissue na yung shares
[01:34:27] um
[01:34:29] um ikaw as a shareholder the question is
[01:34:32] ikaw as a shareholder the question is what's the general rule? The general
[01:34:34] what's the general rule? The general rule is that you're free to as you know
[01:34:37] rule is that you're free to as you know as a property holder of that share
[01:34:39] as a property holder of that share you're free to sell it to anyone. You
[01:34:41] you're free to sell it to anyone. You can do anything with it ' ba property
[01:34:44] can do anything with it ' ba property rights ba the law on property. You're
[01:34:46] rights ba the law on property. You're free to do whatever it whatever you want
[01:34:48] free to do whatever it whatever you want with it.
[01:34:54] limited
[01:34:57] limited if in the articles of incorporation
[01:35:02] if in the articles of incorporation the right of first refusal is granted to
[01:35:05] the right of first refusal is granted to other shareholders.
[01:35:10] Okay. Naintindihanyo ba yung right of
[01:35:14] Okay. Naintindihanyo ba yung right of first refusal?
[01:35:17] first refusal? Um
[01:35:19] Um I suppose all of you guys have taken up
[01:35:21] I suppose all of you guys have taken up oblicon here. But to those who have not
[01:35:25] oblicon here. But to those who have not taken Oblicon, it's basically a right
[01:35:28] taken Oblicon, it's basically a right granted
[01:35:30] granted purely based on contract.
[01:35:33] purely based on contract. Contractual talaga iyan. Okay?
[01:35:36] Contractual talaga iyan. Okay? Contractual talaga yan. for example
[01:35:39] Contractual talaga yan. for example and you have to respect the right of
[01:35:41] and you have to respect the right of first refusal because the contract
[01:35:44] first refusal because the contract between the parties serves as the law
[01:35:47] between the parties serves as the law between the parties. Okay? So you have
[01:35:51] between the parties. Okay? So you have to abide by the terms and conditions of
[01:35:53] to abide by the terms and conditions of the contract.
[01:35:55] the contract. So for example bago ibig sabihin in
[01:35:58] So for example bago ibig sabihin in short no bago mo ibenta yan sa iba,
[01:36:01] short no bago mo ibenta yan sa iba, i-notify mo ako. I-offer mo muna sa
[01:36:04] i-notify mo ako. I-offer mo muna sa akin.
[01:36:06] akin. Okay? In other words, no? Put it to put
[01:36:08] Okay? In other words, no? Put it to put it simply offer mo muna sa kakontrata mo
[01:36:13] it simply offer mo muna sa kakontrata mo bago mo i-offer sa iba. Ngayon, if
[01:36:17] bago mo i-offer sa iba. Ngayon, if inoffer mo sa iba
[01:36:20] inoffer mo sa iba ng mas mababa
[01:36:25] tapos yung offer mo sa akin ay mas
[01:36:27] tapos yung offer mo sa akin ay mas mataas pala, you violated the right of
[01:36:31] mataas pala, you violated the right of first refusal.
[01:36:35] remember. So
[01:36:38] remember. So kailangan anong rule do? Kailangan
[01:36:40] kailangan anong rule do? Kailangan i-offer mo ulit sa akin ng mas mababa.
[01:36:44] i-offer mo ulit sa akin ng mas mababa. Kung ano yung offer mo sa public o sa
[01:36:47] Kung ano yung offer mo sa public o sa third sa sa iba yun ang ioo yung same
[01:36:50] third sa sa iba yun ang ioo yung same amount. That's what you're going to
[01:36:52] amount. That's what you're going to offer to me.
[01:36:55] offer to me. Okay? So yan ang essence ng right to
[01:36:57] Okay? So yan ang essence ng right to first it with respect to corporations
[01:37:01] first it with respect to corporations however.
[01:37:03] however. It's not just simply
[01:37:07] It's not just simply um it must so the rule is that it must
[01:37:10] um it must so the rule is that it must be
[01:37:11] be included in the articles of
[01:37:14] included in the articles of incorporation.
[01:37:16] incorporation. Okay.
[01:37:18] Okay. So that's the requirement
[01:37:21] So that's the requirement and normally
[01:37:24] and normally ang practice niyan. So um it's um if
[01:37:29] ang practice niyan. So um it's um if there is a specific provision on the
[01:37:30] there is a specific provision on the right of first refusal in the articles
[01:37:34] right of first refusal in the articles yung corporate secretary the one who is
[01:37:36] yung corporate secretary the one who is issuing the shares will also include in
[01:37:38] issuing the shares will also include in the recital of the certificate of shares
[01:37:41] the recital of the certificate of shares of stock a provision. on
[01:37:45] of stock a provision. on on the right of first refus
[01:37:48] on the right of first refus meron ding polatilya diyan
[01:37:51] meron ding polatilya diyan minsan may nakalagay yan subject to the
[01:37:54] minsan may nakalagay yan subject to the provisions in the bylaw section
[01:37:58] provisions in the bylaw section xx in the by of ganyan ganyan um
[01:38:02] xx in the by of ganyan ganyan um granting the
[01:38:05] granting the uh stockholders the right of first
[01:38:09] uh stockholders the right of first minsan lumalabas yan sa certificate of
[01:38:12] minsan lumalabas yan sa certificate of shares of
[01:38:15] Okay. So if you're the buyer, you will
[01:38:20] Okay. So if you're the buyer, you will be notified. Uy, meron palang right to
[01:38:24] be notified. Uy, meron palang right to first refusal. Baka magkaproblema ako
[01:38:26] first refusal. Baka magkaproblema ako nito
[01:38:28] nito later on. Okay. So yung pinagkaiba ng
[01:38:31] later on. Okay. So yung pinagkaiba ng right of refusal sa preemptive right.
[01:38:35] right of refusal sa preemptive right. Okay. Preemptive right for unissued
[01:38:38] Okay. Preemptive right for unissued shares. Right to first refusal for
[01:38:40] shares. Right to first refusal for issued shares.
[01:38:46] But take note the right ofusal is not
[01:38:50] But take note the right ofusal is not statutory right. Okay. It's essentially
[01:38:53] statutory right. Okay. It's essentially contractual right lang. So statutory
[01:38:57] contractual right lang. So statutory right meaning it's found under the law.
[01:39:01] right meaning it's found under the law. Section 38 provides for the preemptive
[01:39:03] Section 38 provides for the preemptive right
[01:39:06] right not found in the corporation
[01:39:09] not found in the corporation simply out of contract.
[01:39:15] Section 39, sale or other disposition of
[01:39:18] Section 39, sale or other disposition of assets. Um, that'sal provision.
[01:39:22] assets. Um, that'sal provision. So, I'll just leave it up to you.
[01:39:33] I just I I would just like to highlight
[01:39:35] I just I I would just like to highlight no this provision in relation to the
[01:39:39] no this provision in relation to the Philippine Competition app.
[01:39:41] Philippine Competition app. or Republic Act 10667
[01:39:44] or Republic Act 10667 because under section 20 of the
[01:39:46] because under section 20 of the Philippine Competition act it provides
[01:39:50] Philippine Competition act it provides for uh
[01:39:53] for uh prohibition on certain mergers and
[01:39:55] prohibition on certain mergers and acquisitions
[01:39:58] acquisitions a merger or acquisition
[01:40:00] a merger or acquisition that substantially prevents, restricts
[01:40:04] that substantially prevents, restricts or lessen competition in the relevant
[01:40:07] or lessen competition in the relevant market or in the market for goods or
[01:40:09] market or in the market for goods or services.
[01:40:10] services. as may be determined by the commission
[01:40:13] as may be determined by the commission shall be prohibited.
[01:40:16] shall be prohibited. Okay, that's the power of the PCC. So in
[01:40:19] Okay, that's the power of the PCC. So in cases of mergers and acquisitions,
[01:40:22] cases of mergers and acquisitions, before kasi kung wala pa yung Philippine
[01:40:25] before kasi kung wala pa yung Philippine Competition Act, approval lang ni SEC,
[01:40:28] Competition Act, approval lang ni SEC, okay ka na. If you're a publicly listed
[01:40:30] okay ka na. If you're a publicly listed company, approval lang ni PSE,
[01:40:32] company, approval lang ni PSE, Philippine stock change, you're good to
[01:40:35] Philippine stock change, you're good to go. But now with the Philippine
[01:40:37] go. But now with the Philippine Competition Actly
[01:40:41] with the competition laws
[01:40:45] with the competition laws to ensure that you will not have that to
[01:40:48] to ensure that you will not have that to ensure that your merger is will not be
[01:40:52] ensure that your merger is will not be declared
[01:40:54] declared by the PCC.
[01:41:07] So on sale or other disposition of
[01:41:09] So on sale or other disposition of assets the general rule corporation may
[01:41:11] assets the general rule corporation may by a majority vote of its board of
[01:41:13] by a majority vote of its board of directors or trustes sell lease exchange
[01:41:16] directors or trustes sell lease exchange mortgage pledge or otherwise dispose of
[01:41:19] mortgage pledge or otherwise dispose of its property and assets
[01:41:22] its property and assets except
[01:41:24] except the sale of all or substantially all of
[01:41:26] the sale of all or substantially all of the corporation's properties and assets
[01:41:30] the corporation's properties and assets in which case in which case
[01:41:33] in which case in which case there must be 23d
[01:41:37] there must be 23d uh uh um affirmative vote on the part of
[01:41:42] uh uh um affirmative vote on the part of the stockholders.
[01:41:44] the stockholders. Okay? So kapag sale of all or
[01:41:47] Okay? So kapag sale of all or substantially all, bakit? It's a
[01:41:50] substantially all, bakit? It's a fundamental transaction already. It will
[01:41:53] fundamental transaction already. It will affect the stock.
[01:41:56] affect the stock. So ganon you have to inform the stock
[01:41:59] So ganon you have to inform the stock folders.
[01:42:08] The determination of whether or not the
[01:42:10] The determination of whether or not the sale involves all or substantially all
[01:42:12] sale involves all or substantially all of the corporation properties and assets
[01:42:14] of the corporation properties and assets must be computed based on its net asset
[01:42:17] must be computed based on its net asset value as shown in its latest financial
[01:42:21] value as shown in its latest financial statements.
[01:42:23] statements. A sale or other disposition shall be
[01:42:25] A sale or other disposition shall be deemed to cover substantially all the
[01:42:27] deemed to cover substantially all the corporate property and assets if the
[01:42:31] corporate property and assets if the corporation would be rendered incapable.
[01:42:34] corporation would be rendered incapable. ofuing the business or accomplishing the
[01:42:37] ofuing the business or accomplishing the purpose for which it was incorporated.
[01:42:48] Take note after approval by the
[01:42:51] Take note after approval by the stockholders or members the board of
[01:42:53] stockholders or members the board of directors or trustes may nevertheless in
[01:42:56] directors or trustes may nevertheless in its discretion abandon such sale
[01:43:00] its discretion abandon such sale exchange or other disposition of
[01:43:02] exchange or other disposition of property and assets subject to the
[01:43:05] property and assets subject to the rights of third parties under any
[01:43:07] rights of third parties under any contract relating their two without
[01:43:09] contract relating their two without further action or approval by the
[01:43:11] further action or approval by the stockholders or members.
[01:43:21] The effect on creditors is that the sale
[01:43:25] The effect on creditors is that the sale of all or substantially all of the
[01:43:27] of all or substantially all of the assets of the transfer corporation will
[01:43:32] assets of the transfer corporation will not be liable for the the transfer
[01:43:35] not be liable for the the transfer corporation will not be liable for the
[01:43:37] corporation will not be liable for the debts of the transferor corporation.
[01:43:41] debts of the transferor corporation. Ibig sabihin yung nabenta so yung bibili
[01:43:45] Ibig sabihin yung nabenta so yung bibili bibili ng um assets ng panibagong nung
[01:43:50] bibili ng um assets ng panibagong nung corporation
[01:43:52] corporation hindi uh the corporation will not be
[01:43:54] hindi uh the corporation will not be liable for for the for um the deaths of
[01:43:58] liable for for the for um the deaths of the prior of the transfer corporation
[01:44:03] except in the case of the nell doctrine.
[01:44:06] except in the case of the nell doctrine. Okay.
[01:44:08] Okay. So what is the nil doctrine? No, it's
[01:44:10] So what is the nil doctrine? No, it's it's a Supreme Court ruling. Okay.
[01:44:12] it's a Supreme Court ruling. Okay. Wherein the transfer corporation may be
[01:44:15] Wherein the transfer corporation may be held the transfer corporation may be
[01:44:18] held the transfer corporation may be held accountable for debts of the
[01:44:20] held accountable for debts of the transfer or corporation if there is an
[01:44:25] transfer or corporation if there is an assumption express or implied assumption
[01:44:28] assumption express or implied assumption of liabilities.
[01:44:30] of liabilities. Second, the transaction amounts
[01:44:32] Second, the transaction amounts consolidation or merger. Third, the
[01:44:36] consolidation or merger. Third, the transaction is entered into fraudulently
[01:44:38] transaction is entered into fraudulently to escape liability from debtors or or
[01:44:41] to escape liability from debtors or or purchase was in fraud of creditors
[01:44:45] purchase was in fraud of creditors and the purchaser becomes a continuation
[01:44:49] and the purchaser becomes a continuation of seller.
[01:44:51] of seller. That's the nell document.
[01:45:01] So there are cases no assigned but um I
[01:45:05] So there are cases no assigned but um I don't think we are able to
[01:45:08] don't think we are able to go through all of them. We just continue
[01:45:13] go through all of them. We just continue with those cases our next meeting
[01:45:17] with those cases our next meeting are
[01:45:21] five cases lang naman iyan. And then we
[01:45:24] five cases lang naman iyan. And then we proceed with the seventh week.
[01:45:28] Powers of Corporation. So
[01:45:31] Powers of Corporation. So that's it for today. Are there any
[01:45:33] that's it for today. Are there any questions?
[01:45:36] questions? >> No questions, attorney. Thank you po.
[01:45:38] >> No questions, attorney. Thank you po. >> Thank you. Um so I understand we have
[01:45:42] >> Thank you. Um so I understand we have two more meetings. So we won't be
[01:45:44] two more meetings. So we won't be meeting this Saturday.
[01:45:48] meeting this Saturday. Um I know this coming Saturday but I'll
[01:45:52] Um I know this coming Saturday but I'll be needing um two at least two meetings
[01:45:56] be needing um two at least two meetings coming from uh for our class before we
[01:46:00] coming from uh for our class before we um before we um
[01:46:04] um before we um before you prepare for your meeters.
[01:46:06] before you prepare for your meeters. Okay.
[01:46:09] Okay. All right. Just let me know. Siguro Mr.
[01:46:11] All right. Just let me know. Siguro Mr. Brage, just update me kung kailan yung I
[01:46:14] Brage, just update me kung kailan yung I think there's one makeup class, right?
[01:46:16] think there's one makeup class, right? So just update me.
[01:46:18] So just update me. Happy po. Sige po. All right. So that's
[01:46:21] Happy po. Sige po. All right. So that's it for today. Thank you very much and
[01:46:23] it for today. Thank you very much and have a good life.
[01:46:24] have a good life. >> Thank you po. Thank you po Attney.

#8 | Corp and Basic Sec Law | Title IV: Power of the Corporations | Section 35-38 (March 28, 2026)

https://www.youtube.com/watch?v=JOeVLhhgGJc
Translation: en

[00:01] Good evening.
[00:05] Good evening po, attorney.
[00:10] Let's proceed.
[00:12] Let's proceed. This week we're going to discuss um we're going to continue our discussion on the powers corporation.
[00:19] Uh on our first topic on the section 35 we discuss the power to sue and we sued okay and now we're going to move forward and discuss other powers of a corporation.
[00:32] To recap unless otherwise provided by law the board of directors or trustees exercises corporate powers.
[00:41] They conduct all business of the corporation and control all properties of the corporation.
[00:49] There are some limitations.
[00:54] One, these limitations are imposed by law.
[00:58] Second, if these limitations are
[01:03] ikinci olarak, bu kısıtlamalar, işlevlerle ilgili kısıtlamalar ise
[01:07] yönetim kurulunun kısıtlandığı işlevlerle ilgili kısıtlamalar
[01:10] yönetim kurulunun yapmaktan kısıtlandığı
[01:12] yapmak, örneğin temel
[01:15] bu, örneğin temel değişiklikler anlamına gelir
[01:19] değişiklikler, örneğin
[01:21] örneğin hisse senedi artırmak veya
[01:23] hisse senedi artırmak veya bir şirketin daha fazla hisse senedi ihraç etmek
[01:25] bir şirketin daha fazla hisse senedi ihraç etmek
[01:27] şirket veya
[01:30] bir şirketin tahvil borcunu artırmak
[01:33] bir şirketin tahvil borcunu artırmak
[01:35] şirket veya
[01:39] şey, eğer içeriyorsa
[01:42] şey, eğer içeriyorsa şey
[01:46] şey, temel olan konular
[01:50] şey, temel olan konular, şey şirketle ilgilidir. Tamam. Diyelim ki
[01:53] şey şirketle ilgilidir. Tamam. Örneğin, başka bir örnek şey olacak
[02:02] bu tür diğer yetkileri kullanmak
[03:06] Its express powers.
[03:08] The general principles of agency govern the relationship between the corporation and its officers or agents.
[03:15] In an SEC opinion dated August 17, 1995, the question was whether a corporation could become a limited partner in a Philippine limited partnership.
[03:29] The SEC rule is that a corporation cannot enter into a contract of partnership with an individual or another corporation on the premise that if a corporation enters into a partnership agreement, it will be bound by the acts of persons who are not its duly appointed and authorized agents and officers, which is entirely inconsistent with the policy of the law that the corporation shall manage its own affairs.
[03:57] The SEC only allows the application of this rule as an exception if the following conditions are met.
[04:03] First, the authority to enter into a
[10:17] Şirketler, amaçlarını veya ana sözleşmede belirtilen amaçlarını yerine getirmek için gerekli veya zorunlu olan diğer yetkileri kullanma yetkisine sahiptir.
[10:28] Ana sözleşmede belirtilen amaçlar.
[10:28] Son olarak, ilgili yetkiler.
[10:31] İlgili yetkiler, şirketin varlığına bağlı olduğu için şirkete verildiği düşünülen yetkilerdir.
[10:40] Şirketlere, tüzel kişilik olarak var olmalarının bir sonucu olduğu için bu tür yetkiler verilmiştir.
[10:56] Soru.
[10:58] Ana sözleşmede belirtilen temel amacı belirli bir ürünü satmak olan bir şirket, aynı zamanda üretimle de meşgul olabilir mi?
[12:30] um corporation do um you have all cross powers and employed powers so my answer to the question again is yes it can allow
[12:47] allow >> so okay so what is your answer >> yes po attorney it can be allowed to attorney
[12:55] attorney >> why
[13:00] um because manufacturing is um necessary to sell the product or it is um reasonably incidental
[13:15] sa purpose po ng ng corporation, sa primary purpose of the corporation, how about selling and um entering into a buy and sell or trading
[13:36] with regards to the buy and sell.
[13:38] with regards to the buy and sell attorney Um.
[13:44] it cannot sell attorney unless first.
[13:48] it cannot sell attorney unless first buys or acquire those.
[13:53] how about?
[13:55] how about selling and.
[14:00] selling of a product.
[14:02] selling of a product and for exle.
[14:12] selling of a product and.
[14:17] engaging in or or um.
[14:22] engaging in or or um providing loans.
[14:30] Um.
[14:35] so ify purpose po is.
[14:42] avukat için bu şunları yapabilir
[14:45] avukat için bu, yalnızca dokunma etkinliği varsa kredi sağlayabilir
[14:50] kredi sağlayabilir ancak yalnızca dokunma etkinliği ise
[14:52] iş modeline gereklidir.
[14:57] iş modeline gereklidir. Cevabınız nedir? Cevabınız nedir?
[15:00] Cevabınız nedir? Cevabınız nedir? Evet
[15:01] Evet, ben olabilirim.
[15:06] Bir ürün satmak ve um
[15:12] Bir ürün satmak ve nakliye
[15:21] ne zaman um
[15:24] ne zaman um nakliye ile ilgili olarak
[15:29] nakliye ile ilgili olarak um elbette benim için avukat çünkü
[15:32] um elbette benim için avukat çünkü um nakliye gereklidir din po iyung
[15:35] um nakliye gereklidir din po iyung satış amacı. çünkü
[15:38] satış amacı. çünkü um
[16:45] Yes, what is it, Attorney?
[16:50] The logistics will is valid, but it will become
[16:54] uh an ultra vigorous act if conducted
[16:59] as an independent business without proper authority.
[17:06] What's your answer?
[17:13] Um, if
[17:15] If yes, Attorney, if the products to be stored are for its own goods.
[17:23] stored are for its own goods.
[17:33] Arias,
[17:43] are you present?
[17:52] Are you present?
[17:54] Are you present?
[17:54] Good evening.
[17:59] Okay.
[18:03] If the primary purpose of your business is selling of a product, are you is it possible for your business to engage in manufacturing?
[18:24] Um, you're on mute.
[18:28] Yes, aing. Yes, engage in
[18:32] Yes, aing. Yes, engage in
[18:34] if your business if the primary purpose of your business is okay same question okay selling of a product is it possible or is it um are you allowed to enter into trading
[18:55] Ticari olarak genel evet avukat.
[19:05] eh tamam aynı soru ha mümkün mü.
[19:09] eh tamam aynı soru ha mümkün mü veya kredi vermeye girebilir misiniz.
[19:24] bir işletme sağlıyor.
[19:27] bir işletme.
[19:27] Tamam.
[19:29] Sizden somut bir cevap istiyorum, kesin bir cevap.
[19:31] Evet mi hayır mı?
[19:33] hayır mı? Hayır avukat hayır.
[19:35] hayır.
[19:35] Tamam.
[19:37] Aynı soru.
[19:37] Lojistik nasıl?
[19:40] Evet mi hayır mı?
[19:43] Evet mi hayır mı?
[19:47] Eğer işletme avukat avukat tamam yani aslında sadece senin.
[19:51] tamam yani aslında sadece senin sadece senin hayırın.
[19:53] sadece senin hayırın.
[19:53] Evet efendim.
[20:03] time.
[20:07] um yes attorney good evening po.
[20:10] um yes attorney good evening po.
[20:10] same questions.
[20:12] same questions okay telling of a product the primary.
[20:14] okay telling of a product the primary purpose of the business are you allowed.
[20:16] purpose of the business are you allowed to engage in manufacturing.
[20:19] to engage in manufacturing of the product.
[20:20] of the product.
[20:20] uh yes attorney.
[20:22] uh yes attorney.
[20:22] how about.
[20:24] how about uh trading.
[20:27] uh trading.
[20:27] um yes also attorney.
[20:30] um yes also attorney.
[20:30] How about providing loans?
[20:33] How about providing loans?
[20:33] No attorney.
[20:35] No attorney.
[20:35] How about logistics?
[20:38] How about logistics?
[20:38] Um, yes. Attorney.
[20:40] Um, yes. Attorney.
[20:40] So parehas kayo ni Miss or yas.
[20:46] Okay.
[20:49] Okay.
[20:49] Then an SEC opinion,
[20:52] Then an SEC opinion, okay, dated um.
[20:56] okay, dated um July 2007,
[20:59] July 2007, one of the issues presented to the.
[21:02] one of the issues presented to the commission was may a corporation whose

#8 | Corp and Basic Sec Law | Title IV: Power of the Corporations | Section 35-38 (March 28, 2026)

https://www.youtube.com/watch?v=JOeVLhhgGJc
Translation: en

[00:01] Good evening.
Good evening.

[00:05] Good evening po, attorney.
Good evening po, attorney.

[00:10] Let's proceed.
Let's proceed.

[00:12] Let's proceed. This week we're going to discuss um we're going to continue our discussion on the powers corporation.
Let's proceed. This week we're going to discuss um we're going to continue our discussion on the powers corporation.

[00:19] Uh on our first topic on the section 35 we discuss the power to sue and we sued okay and now we're going to move forward and discuss other powers of a corporation.
Uh on our first topic on the section 35 we discuss the power to sue and we sued okay and now we're going to move forward and discuss other powers of a corporation.

[00:32] To recap unless otherwise provided by law the board of directors or trustees exercises corporate powers.
To recap unless otherwise provided by law the board of directors or trustees exercises corporate powers.

[00:41] They conduct all business of the corporation and control all properties of the corporation.
They conduct all business of the corporation and control all properties of the corporation.

[00:49] There are some limitations.
There are some limitations.

[00:54] One, these limitations are imposed by law.
One, these limitations are imposed by law.

[00:58] Second, if these limitations are
Second, if these limitations are

[01:03] second if these limitations are limitations with respect to uh functions
ikinci olarak, bu kısıtlamalar, işlevlerle ilgili kısıtlamalar ise

[01:07] limitations with respect to uh functions in which the board is constrained from
yönetim kurulunun kısıtlandığı işlevlerle ilgili kısıtlamalar

[01:10] in which the board is constrained from doing
yönetim kurulunun yapmaktan kısıtlandığı

[01:12] doing that means for exle the fundamental
yapmak, örneğin temel

[01:15] that means for exle the fundamental changes toation
bu, örneğin temel değişiklikler anlamına gelir

[01:19] changes toation like um
değişiklikler, örneğin

[01:21] like um increasing the shares of stock or
örneğin hisse senedi artırmak veya

[01:23] increasing the shares of stock or further issuing shares of stock of a
hisse senedi artırmak veya bir şirketin daha fazla hisse senedi ihraç etmek

[01:25] further issuing shares of stock of a corporation
bir şirketin daha fazla hisse senedi ihraç etmek

[01:27] corporation or
şirket veya

[01:30] increasing the bond indebtedness of a
bir şirketin tahvil borcunu artırmak

[01:33] increasing the bond indebtedness of a corporation
bir şirketin tahvil borcunu artırmak

[01:35] corporation or
şirket veya

[01:39] um if it involves
şey, eğer içeriyorsa

[01:42] um if it involves um
şey, eğer içeriyorsa şey

[01:46] um matters that are are fundamental to
şey, temel olan konular

[01:50] um matters that are are fundamental to uh the corporation. Okay. Say for
şey, temel olan konular, şey şirketle ilgilidir. Tamam. Diyelim ki

[01:53] uh the corporation. Okay. Say for example, another example will be um
şey şirketle ilgilidir. Tamam. Örneğin, başka bir örnek şey olacak

[02:02] to exercise such other powers
bu tür diğer yetkileri kullanmak

[02:05] to exercise such other powers um which are not ordinarily um granted to it under its primary uh purposes under the articles of incorporation.

[02:17] incorporation. Okay.

[02:19] Okay. Sale or or purchase or receive, take or grant, hold, convey, sell pledge, mortgage and personal property of the college as well as to enter into a partnership joint venture merger all consolidation.

[02:37] joint venture merger all consolidation. The third limitation is um if there is if the board cannot exercise powers not possessed by the corporation.

[02:49] The corporation can also act through its corporate officers who may be authorized either expressly by the bylaws or board resolutions or implied such as by general practice or policy or as implied from its express powers.

[03:06] From its express powers.
Its express powers.

[03:08] The general principles of agency govern the relation between the corporation and its officers or agents.
The general principles of agency govern the relationship between the corporation and its officers or agents.

[03:15] In an SEC opinion dated August 17, 1995, the query was that may a corporation become a limited partner in a Philippine limited partnership.
In an SEC opinion dated August 17, 1995, the question was whether a corporation could become a limited partner in a Philippine limited partnership.

[03:29] The SEC rule that a corporation cannot enter into a contract of partnership with an individual or another corporation on the prem if a corporation enters into a partnership agreement it will be bound by the acts of the persons who are not its duly appointed and authorized agents and officers which is entirely inconsistent with the policy of the law that the corporation shall manage its own affairs.
The SEC rule is that a corporation cannot enter into a contract of partnership with an individual or another corporation on the premise that if a corporation enters into a partnership agreement, it will be bound by the acts of persons who are not its duly appointed and authorized agents and officers, which is entirely inconsistent with the policy of the law that the corporation shall manage its own affairs.

[03:57] The SEC only allows as an exception the application of this rule if the following conditions are complied with.
The SEC only allows the application of this rule as an exception if the following conditions are met.

[04:03] First, the authority to enter into a
First, the authority to enter into a

[04:09] First the authority to enter into a partnership relation is expressly conferred by the charter of the articles of incorporation and the nature of the business venture to be undertaken by the partnership is in line with the business authorized by the charter or articles incorporation.

[04:25] Second the agreement on the articles of partnership must provide that all the partners shall manage the partnership and the articles of partnership must stipulate that all the partners shall be jointly and severely liable for all the obligations of the partnership.

[04:43] Third, if it is a for corporation it musttain a license to transact business in the country in accordance with the corporation code of theppines.

[04:57] In another SEC opinion dated October 4, 2016, the question was that the issue was that may a corporation enter into a joint venture agreement with another company.

[05:10] venture agreement with another company having a similar purpose.

[05:15] SEC uh ruled in the affirmative.

[05:20] uh ruled in the affirmative.

[05:23] So it cited the case of our back at all versus sanitary manufacturing corporation wherein the Supreme Court help that under Philippine law a joint venture is a form of partnership and should be governed by the law of partnership.

[05:38] The Supreme Court has recognized a distinction between these two business forms and has held that although a corporation is as a general rule may be uh may be uh may not uh prohibited from entering into um partnerships.

[06:01] It may however engage in a joint venture with others.

[06:06] Further the commission in a lit of opinions has laid down the settled

[06:11] of opinions has laid down the settled rule that two or more corporations may enter into a joint venture through a contract or agreement if the nature of the venture is in line with the business authorized by their charters.

[06:30] Note however that under the revised corporation code this was already uh uh expressly provided under section 35.

[06:42] So the SEC opinion was 2006 opinion 2016 opinion it was now codified into the existing revised corporation code.

[06:52] Section 35 H provides now grants the corporation the power to enter into a joint venture.

[07:07] Another SEC opinion dated October 26, 2004.

[07:10] The issue was

[07:14] dated October 26, 2004.

[07:16] The issue was that that may the board of directors of a may the board of directors of a corporation order a temporary stop of corporation order a temporary stop of the business operation the business operation business operations for reason beyond business operations for reason beyond its control without approval from the its control without approval from the stockholders.

[07:32] stockholders.

[07:35] without approval from the stockholder the SEC held that no corporate powers the SEC held that no corporate powers confirmed upon the board of directors confirmed upon the board of directors usually refer only to ordinary business usually refer only to ordinary business transactions of the corporation and do transactions of the corporation and do not extend beyond the management of not extend beyond the management of ordinary corporate affairs not beyond ordinary corporate affairs not beyond the limits of its authority the limits of its authority while the performance of the corporate while the performance of the corporate functions pertaining to management of functions pertaining to management of the corporation is vested upon the board the corporation is vested upon the board the corporation code has expressly the corporation code has expressly restricted such board authority and made restricted such board authority and made certain corporate actions to rest for

[08:14] certain corporate actions to rest for their validity upon the concurrence of their validity upon the concurrence of the required statutory votes of the the required statutory votes of the stockholders or members by prior action stockholders or members by prior action or subsequent ratification.

[08:27] in in that particular case the issue as in in that particular case the issue as to the temporary stoppage of the to the temporary stoppage of the operation of a corporation can no longer operation of a corporation can no longer be classified as an ordinary business be classified as an ordinary business transaction such as to limit its transaction such as to limit its approval to the board of directors.

[08:46] The cessation of a corporate The cessation of a corporate entities business though it may only be entities business though it may only be temporary, is a fundamental concern temporary, is a fundamental concern which should be decided not only by the which should be decided not only by the board but also by the stockholders.

[09:10] There are three kinds of powers.

[09:15] First is the express powers.

[09:19] First is the express powers.

[09:22] The express powers are the powers expressly provided by the revised corporation code applicable special laws and the articles of incorporation.

[09:27] The express powers are the powers expressly provided by the revised corporation code applicable special laws and the articles of incorporation.

[09:31] The powers expressly provided in the revised corporation code are the part of the articles of incorporation even if such powers are not enumerated.

[09:34] The powers expressly provided in the revised corporation code are the part of the articles of incorporation even if such powers are not enumerated.

[09:40] The powers expressly provided in the revised corporation code are the part of the articles of incorporation even if such powers are not enumerated.

[09:45] Section 35 enumerates so that's um letters A to K the general powers of a corporations.

[09:48] Section 35 enumerates so that's um letters A to K the general powers of a corporations.

[09:52] Section 35 enumerates so that's um letters A to K the general powers of a corporations.

[10:01] Implied powers.

[10:04] Implied powers.

[10:06] The existence of implied powers of a corporation is recognized under section 35K of the revised corporation.

[10:09] The existence of implied powers of a corporation is recognized under section 35K of the revised corporation.

[10:14] Corporations are empowered to exercise

[10:17] Corporations are empowered to exercise such other powers as may be essential or such other powers as may be essential or necessary to carry out its purpose or necessary to carry out its purpose or purposes as stated in the articles.
Şirketler, amaçlarını veya ana sözleşmede belirtilen amaçlarını yerine getirmek için gerekli veya zorunlu olan diğer yetkileri kullanma yetkisine sahiptir.

[10:28] Purposes as stated in the articles.
Ana sözleşmede belirtilen amaçlar.

[10:28] Lastly, incidental powers.
Son olarak, ilgili yetkiler.

[10:31] Incidental powers are powers that are deemed confirmed on the corporation because they are incidental to the existence of the corporation.
İlgili yetkiler, şirketin varlığına bağlı olduğu için şirkete verildiği düşünülen yetkilerdir.

[10:40] Corporations are deed given such powers because they are the consequences of the fact that they exist as juridical beings.
Şirketlere, tüzel kişilik olarak var olmalarının bir sonucu olduğu için bu tür yetkiler verilmiştir.

[10:56] Question.
Soru.

[10:58] May a corporation whose primary purpose stated in articles of incorporation is selling selling a particular product can that corporation be likewise engaged in manufacturing
Ana sözleşmede belirtilen temel amacı belirli bir ürünü satmak olan bir şirket, aynı zamanda üretimle de meşgul olabilir mi?

[11:29] All air.

[11:45] Wala air present.

[11:47] Wala air present absent.

[11:53] Unahon.

[11:56] Gooding.

[11:59] Gooding. Good evening. So the question is, may a corporation whose primary purpose is the sale of a product, as stated in the articles of incorporation, be or enter into a manufacturing business? Is that allowed?

[12:24] Well, as for the general.

[12:30] um corporation do um you have all cross powers and employed powers so my answer to the question again is yes it can allow
um corporation do um you have all cross powers and employed powers so my answer to the question again is yes it can allow

[12:47] allow >> so okay so what is your answer >> yes po attorney it can be allowed to attorney
allow >> so okay so what is your answer >> yes po attorney it can be allowed to attorney

[12:55] attorney >> why
attorney >> why

[13:00] um because manufacturing is um necessary to sell the product or it is um reasonably incidental
um because manufacturing is um necessary to sell the product or it is um reasonably incidental

[13:15] sa purpose po ng ng corporation, sa primary purpose of the corporation, how about selling and um entering into a buy and sell or trading
sa purpose po ng ng corporation, sa primary purpose of the corporation, how about selling and um entering into a buy and sell or trading

[13:36] with regards to the buy and sell.
with regards to the buy and sell.

[13:38] with regards to the buy and sell attorney Um.
with regards to the buy and sell attorney Um.

[13:44] it cannot sell attorney unless first.
it cannot sell attorney unless first.

[13:48] it cannot sell attorney unless first buys or acquire those.
it cannot sell attorney unless first buys or acquire those.

[13:53] how about?
how about?

[13:55] how about selling and.
how about selling and.

[14:00] selling of a product.
selling of a product.

[14:02] selling of a product and for exle.
selling of a product and for exle.

[14:12] selling of a product and.
selling of a product and.

[14:17] engaging in or or um.
engaging in or or um.

[14:22] engaging in or or um providing loans.
engaging in or or um providing loans.

[14:30] Um.
Um.

[14:35] so ify purpose po is.
so ify purpose po is.

[14:42] for attorney it will it may engage in
avukat için bu şunları yapabilir

[14:45] for attorney it will it may engage in loans po only if um the touch activity
avukat için bu, yalnızca dokunma etkinliği varsa kredi sağlayabilir

[14:50] loans po only if um the touch activity is
kredi sağlayabilir ancak yalnızca dokunma etkinliği ise

[14:52] is necessary to its business pattern.
iş modeline gereklidir.

[14:57] necessary to its business pattern. What's your answer? What's your answer?
iş modeline gereklidir. Cevabınız nedir? Cevabınız nedir?

[15:00] What's your answer? What's your answer? Yes
Cevabınız nedir? Cevabınız nedir? Evet

[15:01] Yes it may be me.
Evet, ben olabilirim.

[15:06] How about selling of a product and um
Bir ürün satmak ve um

[15:12] How about selling of a product and um shipping
Bir ürün satmak ve nakliye

[15:21] when um
ne zaman um

[15:24] when um with regards with the shipping po at
ne zaman um nakliye ile ilgili olarak

[15:29] with regards with the shipping po at um of course po attorney for me because
nakliye ile ilgili olarak um elbette benim için avukat çünkü

[15:32] um of course po attorney for me because um shipping is necessary din po iyung
um elbette benim için avukat çünkü um nakliye gereklidir din po iyung

[15:35] um shipping is necessary din po iyung purpose of selling. because
um nakliye gereklidir din po iyung satış amacı. çünkü

[15:38] purpose of selling. because um
satış amacı. çünkü um

[15:42] we sell products through sometimes we

[15:44] we sell products through sometimes we sell products our products

[15:47] sell products our products through shipping

[15:50] through shipping how about

[15:51] how about selling of a product okay that's the

[15:54] selling of a product okay that's the primary purpose and

[15:58] primary purpose and logistics 6

[16:14] mm

[16:17] mm selling of a product and logistics

[16:24] allowed both

[16:26] allowed both allowed to Same same um scenario. Okay.

[16:30] allowed to Same same um scenario. Okay.

[16:32] The primary purpose of your business is selling of a product.

[16:35] uh

[16:37] uh is it possible for you to engage in

[16:39] is it possible for you to engage in logistics?

[16:45] Um ano po Attorney?
Yes, what is it, Attorney?

[16:50] Um logistics will is valid po but um it will become
The logistics will is valid, but it will become

[16:54] uh an ultra viigorous act po if conducted
uh an ultra vigorous act if conducted

[16:59] as an independent business without proper or authority.
as an independent business without proper authority.

[17:06] What's your answer?
What's your answer?

[17:13] Um if
Um, if

[17:15] if yes po Attorney if if the products to be stored is for its own goods po.
If yes, Attorney, if the products to be stored are for its own goods.

[17:23] stored is for its own goods po.
stored are for its own goods.

[17:33] Arias,
Arias,

[17:43] are you present?
are you present?

[17:52] Are you present?
Are you present?

[17:54] Are you present?
Are you present?

[17:54] Good evening.
Good evening.

[17:59] Okay.
Okay.

[18:03] If the primary purpose of your business is selling of a product, are you is it possible for your business to engage in manufacturing?
If the primary purpose of your business is selling of a product, are you is it possible for your business to engage in manufacturing?

[18:24] Um, you're on mute.
Um, you're on mute.

[18:28] Yes, aing. Yes, engage in
Yes, aing. Yes, engage in

[18:32] Yes, aing. Yes, engage in
Yes, aing. Yes, engage in

[18:34] if your business if the primary purpose of your business is okay same question okay selling of a product is it possible or is it um are you allowed to enter into trading
if your business if the primary purpose of your business is okay same question okay selling of a product is it possible or is it um are you allowed to enter into trading

[18:55] trading of ba mga general yes attorney.
Ticari olarak genel evet avukat.

[19:05] eh okay same question ha is it possible.
eh tamam aynı soru ha mümkün mü.

[19:09] eh okay same question ha is it possible or are you allowed to enter into providing loans.
eh tamam aynı soru ha mümkün mü veya kredi vermeye girebilir misiniz.

[19:24] providing a business.
bir işletme sağlıyor.

[19:27] a business.
bir işletme.

[19:27] Okay.
Tamam.

[19:29] I want a concrete I want a firm answer from you.
Sizden somut bir cevap istiyorum, kesin bir cevap.

[19:31] Yes or no?
Evet mi hayır mı?

[19:33] no? No attorney no.
hayır mı? Hayır avukat hayır.

[19:35] no.
hayır.

[19:35] Okay.
Tamam.

[19:37] Same question.
Aynı soru.

[19:37] How about logistics?
Lojistik nasıl?

[19:40] Yes or no?
Evet mi hayır mı?

[19:43] Yes or no?
Evet mi hayır mı?

[19:47] If business attorney attorney okay so in effect isa lang yung.
Eğer işletme avukat avukat tamam yani aslında sadece senin.

[19:51] okay so in effect isa lang yung isa lang yung no mo.
tamam yani aslında sadece senin sadece senin hayırın.

[19:53] isa lang yung no mo.
sadece senin hayırın.

[19:53] Yes sir.
Evet efendim.

[20:03] oras.
time.

[20:07] um yes attorney good evening po.
um yes attorney good evening po.

[20:10] um yes attorney good evening po.
um yes attorney good evening po.

[20:10] same questions.
same questions.

[20:12] same questions okay telling of a product the primary.
same questions okay telling of a product the primary.

[20:14] okay telling of a product the primary purpose of the business are you allowed.
okay telling of a product the primary purpose of the business are you allowed.

[20:16] purpose of the business are you allowed to engage in manufacturing.
purpose of the business are you allowed to engage in manufacturing.

[20:19] to engage in manufacturing of the product.
to engage in manufacturing of the product.

[20:20] of the product.
of the product.

[20:20] uh yes attorney.
uh yes attorney.

[20:22] uh yes attorney.
uh yes attorney.

[20:22] how about.
how about.

[20:24] how about uh trading.
how about uh trading.

[20:27] uh trading.
uh trading.

[20:27] um yes also attorney.
um yes also attorney.

[20:30] um yes also attorney.
um yes also attorney.

[20:30] How about providing loans?
How about providing loans?

[20:33] How about providing loans?
How about providing loans?

[20:33] No attorney.
No attorney.

[20:35] No attorney.
No attorney.

[20:35] How about logistics?
How about logistics?

[20:38] How about logistics?
How about logistics?

[20:38] Um, yes. Attorney.
Um, yes. Attorney.

[20:40] Um, yes. Attorney.
Um, yes. Attorney.

[20:40] So parehas kayo ni Miss or yas.
So parehas kayo ni Miss or yas.

[20:46] Okay.
Okay.

[20:49] Okay.
Okay.

[20:49] Then an SEC opinion,
Then an SEC opinion,

[20:52] Then an SEC opinion, okay, dated um.
Then an SEC opinion, okay, dated um.

[20:56] okay, dated um July 2007,
okay, dated um July 2007,

[20:59] July 2007, one of the issues presented to the.
July 2007, one of the issues presented to the.

[21:02] one of the issues presented to the commission was may a corporation whose
one of the issues presented to the commission was may a corporation whose

[21:04] commission was may a corporation whose primary purpose stated in the articles

[21:07] primary purpose stated in the articles of incorporation

[21:09] of incorporation is selling product engaged in

[21:13] is selling product engaged in manufacturing.

[21:15] manufacturing. The ruling of the SEC is in the

[21:17] The ruling of the SEC is in the negative.

[21:20] negative. Manufacturing is not incidental or in

[21:24] Manufacturing is not incidental or in furtherance of the business of selling

[21:29] furtherance of the business of selling whereas marketing and selling are

[21:31] whereas marketing and selling are logically inferable from the business of

[21:35] logically inferable from the business of manufacturing considering that there

[21:37] manufacturing considering that there must be an end user for the goods of

[21:39] must be an end user for the goods of products. The same could not be said for

[21:41] products. The same could not be said for the business of selling as covering the

[21:45] the business of selling as covering the business of manufacturing.

[21:47] business of manufacturing. The underlying reason for this is that

[21:49] The underlying reason for this is that it is not necessary or indispensable

[21:53] it is not necessary or indispensable that a trader or dealer of goods must

[21:57] that a trader or dealer of goods must also be the manufacturer.

[22:02] Okay, that's the ruling of the SEC

[22:07] with respect to general trading

[22:11] with respect to general trading that may be that is ano may be implied

[22:16] that may be that is ano may be implied okay from the power from the power of

[22:19] okay from the power from the power of selling a product

[22:22] selling a product right

[22:24] right walang problema yan general merchandise

[22:27] walang problema yan general merchandise general trading marami kayong nakikita

[22:29] general trading marami kayong nakikita niyan ba?

[22:32] niyan ba? How about providing loans? Obviously,

[22:36] How about providing loans? Obviously, no. Right? As a matter of fact, you have

[22:39] no. Right? As a matter of fact, you have to get a separate license from the BSP

[22:43] to get a separate license from the BSP for you to engage in providing loans.

[22:47] for you to engage in providing loans. Okay,

[22:49] Okay, that's a separate license all together.

[22:53] that's a separate license all together. Logistics, it's a different business.

[22:57] Logistics, it's a different business. Okay. Freight forwarding is different

[23:00] Okay. Freight forwarding is different business. you see mga trackers right

[23:06] business. you see mga trackers right may business sa mga tracking forwarding

[23:09] may business sa mga tracking forwarding that's separate

[23:12] that's separate yung mga

[23:14] yung mga um for example um manufacturers

[23:18] um for example um manufacturers um

[23:20] um they hire okay logistics company

[23:26] so that's entirely separate that's a

[23:29] so that's entirely separate that's a separate business. Now, magtatanong kayo

[23:32] separate business. Now, magtatanong kayo sir, bakit sa mga conglomerates sa

[23:35] sir, bakit sa mga conglomerates sa malalaking kumpanya

[23:38] malalaking kumpanya merong ah parang interconnected sila?

[23:42] merong ah parang interconnected sila? That's possible because that means they

[23:44] That's possible because that means they are vertically integrated.

[23:47] are vertically integrated. Ano ibig sabihin ng vertically

[23:49] Ano ibig sabihin ng vertically integrated? You have a mother

[23:51] integrated? You have a mother corporation, holding company, for

[23:55] corporation, holding company, for example,

[23:56] example, JG summit.

[24:00] JG summit. Gokong way group that's their mother

[24:02] Gokong way group that's their mother holding company

[24:05] holding company sa baba niyan separate businesses.

[24:09] sa baba niyan separate businesses. Okay. You have Universal Rubina

[24:11] Okay. You have Universal Rubina Corporation,

[24:13] Corporation, you have Cebu Pacific, you have o tawag

[24:18] you have Cebu Pacific, you have o tawag noun vertical integration.

[24:23] But the businesses

[24:25] But the businesses are separate.

[24:29] Okay? Hindi pwedeng same yan. Hindi

[24:32] Okay? Hindi pwedeng same yan. Hindi pwedeng si Universal Rubina Corporation

[24:35] pwedeng si Universal Rubina Corporation also be doing the logistics ba

[24:39] also be doing the logistics ba iba ang gumagawa ng logistics ni

[24:41] iba ang gumagawa ng logistics ni Universal Rubino Corporation.

[24:44] Universal Rubino Corporation. Okay. Definitely si Universal Rubina

[24:47] Okay. Definitely si Universal Rubina Corporation cannot engage in loans,

[24:52] Corporation cannot engage in loans, right? Providing loans on the getting

[24:55] right? Providing loans on the getting deposits from the public. May separate

[24:57] deposits from the public. May separate arm si JG Samit diyan. Ano ang separate

[25:00] arm si JG Samit diyan. Ano ang separate arm niya? Robinson's bang

[25:03] arm niya? Robinson's bang ba

[25:05] ba separate arm pa. Iba pa nga ang fintech

[25:07] separate arm pa. Iba pa nga ang fintech nila eh. Yung go time 'di ba?

[25:14] So iba-ibang businesses, iba-ibang

[25:16] So iba-ibang businesses, iba-ibang purpose but they can be vertically

[25:19] purpose but they can be vertically integrated by a holding company.

[25:26] para hindi kayo malito

[25:28] para hindi kayo malito any questions

[25:33] maraming ganyan sa Philippines. You have

[25:36] maraming ganyan sa Philippines. You have San Miguel,

[25:38] San Miguel, >> you have

[25:39] >> you have >> DMCI,

[25:41] >> DMCI, you have um

[25:44] you have um um

[25:47] um dami.

[25:49] dami. Mes What's the question,

[25:53] Mes What's the question, >> sir? It means in a holding uh holding

[25:55] >> sir? It means in a holding uh holding company uh maraming corporation under

[25:58] company uh maraming corporation under that holding.

[26:00] that holding. Yes, it's the mother company but take

[26:03] Yes, it's the mother company but take note, it's simp it's simply hold ang

[26:07] note, it's simp it's simply hold ang purpose lang ng holding company parang

[26:09] purpose lang ng holding company parang investment 'yan. Investment arm yan '

[26:13] investment 'yan. Investment arm yan ' ba? Ownership lang, ownership of stocks

[26:16] ba? Ownership lang, ownership of stocks lang ang kailangan niyan. They do not

[26:18] lang ang kailangan niyan. They do not run the affairs of the separate

[26:20] run the affairs of the separate business.

[26:22] business. separate businesses.

[26:24] separate businesses. Example example another example si SM

[26:29] Example example another example si SM investments yan yung parang

[26:33] investments yan yung parang mother company niyan eh. Okay? It owns

[26:38] mother company niyan eh. Okay? It owns the shares of stock

[26:40] the shares of stock different corporations of SM

[26:44] different corporations of SM but they do not run the affairs of the

[26:46] but they do not run the affairs of the business.

[26:48] business. Ano yung kinikita nito? Kumikita 'to ng

[26:50] Ano yung kinikita nito? Kumikita 'to ng dividend. inaakyat nila dividend

[26:54] dividend. inaakyat nila dividend okay sa other corporation inaakyat nila

[26:57] okay sa other corporation inaakyat nila yan that's why if you're into

[27:01] yan that's why if you're into investments for example ah sa stock

[27:04] investments for example ah sa stock exchange ka

[27:07] exchange ka sa mirara mining is under the arm of

[27:09] sa mirara mining is under the arm of dmci

[27:11] dmci okay another unit niya is dmci holding

[27:15] okay another unit niya is dmci holding okay under dcii holdings mayon silang

[27:18] okay under dcii holdings mayon silang mining and power mayon silang lang. So

[27:22] mining and power mayon silang lang. So you have Semirara mining and power you

[27:24] you have Semirara mining and power you have separate pa ang DMCI mining.

[27:27] have separate pa ang DMCI mining. Separate pa ang meron silang chartering

[27:29] Separate pa ang meron silang chartering business may um aviation sila.

[27:34] business may um aviation sila. obviously yung real estateung DMCI

[27:38] obviously yung real estateung DMCI condhintay

[27:49] lang siya ng dividends coming from its

[27:53] lang siya ng dividends coming from its businesses. If you notice now nung um

[27:57] businesses. If you notice now nung um hindi binigyan ng um hindi binigyan ng

[28:00] hindi binigyan ng um hindi binigyan ng extension ng mining permit ng government

[28:03] extension ng mining permit ng government si Mirara mining

[28:06] si Mirara mining bumaba yung ah yung stock value ni

[28:11] bumaba yung ah yung stock value ni Samirara mining.

[28:13] Samirara mining. Okay? Kasi hindi in-extend e.

[28:18] Okay? Kasi hindi in-extend e. Ano nangyari sa stock value ni DMCI

[28:21] Ano nangyari sa stock value ni DMCI holdings? Bumaba din.

[28:25] holdings? Bumaba din. So ganun yung effect niya kasi wala yung

[28:31] So ganun yung effect niya kasi wala yung akyat ng dividends will also be affected

[28:35] akyat ng dividends will also be affected ba. So if you're the mother company

[28:38] ba. So if you're the mother company um

[28:41] um you're going to be concerned also,

[28:43] you're going to be concerned also, right? Because if the if if um yung mga

[28:47] right? Because if the if if um yung mga subsidiaries mo you're not performing

[28:50] subsidiaries mo you're not performing well, they're not going to you

[28:52] well, they're not going to you dividends.

[28:55] dividends. That's it.

[29:00] Any other questions? Meron dala. Oo

[29:03] Any other questions? Meron dala. Oo sige,

[29:06] sige, follow up questions.

[29:08] follow up questions. Yung sa holding company, Attorney, may

[29:10] Yung sa holding company, Attorney, may mga corporation pero yung mga yung ah

[29:13] mga corporation pero yung mga yung ah meron bang parang vertical relation yung

[29:15] meron bang parang vertical relation yung mga corporation under that holdings or

[29:18] mga corporation under that holdings or talagang dapat separate din sila ng ah

[29:22] talagang dapat separate din sila ng ah parang mga primary ano nila separation.

[29:25] parang mga primary ano nila separation. Pwedeng maging interconnected pa rin po

[29:26] Pwedeng maging interconnected pa rin po yun.

[29:27] yun. The only reason they're interconnected

[29:29] The only reason they're interconnected is because they're vertically

[29:31] is because they're vertically integrated.

[29:32] integrated. So for example,

[29:35] So for example, Semirara Mining and Power Corporation

[29:38] Semirara Mining and Power Corporation is technically into mining and power

[29:42] is technically into mining and power pero separate kasi yung contract niya

[29:45] pero separate kasi yung contract niya with the government. As opposed, meron

[29:47] with the government. As opposed, meron ding mining arm eh. Separate mining arm

[29:49] ding mining arm eh. Separate mining arm si DMCI. Ang pangalan niya DMCI mining.

[29:54] si DMCI. Ang pangalan niya DMCI mining. DMC. Dalawa yan ha. DMCI mining,

[29:56] DMC. Dalawa yan ha. DMCI mining, Semerara mining both under

[30:00] Semerara mining both under DMCI holdings

[30:02] DMCI holdings pero iba yung pagpapatakbo altogether.

[30:05] pero iba yung pagpapatakbo altogether. Iba hindi sila nag ah hindi sila

[30:08] Iba hindi sila nag ah hindi sila nagshe-share ng assets. Hindi sila

[30:11] nagshe-share ng assets. Hindi sila nagshe-share ng management. Iba ang

[30:13] nagshe-share ng management. Iba ang presidente ng DMCI mining. Iba ang

[30:15] presidente ng DMCI mining. Iba ang presidente ng Semirara mining.

[30:21] So nung tumaas yung bumaba yung value ng

[30:24] So nung tumaas yung bumaba yung value ng Semirara mining, bumaba ang value ng

[30:26] Semirara mining, bumaba ang value ng DMCI mining? Not necessary.

[30:30] DMCI mining? Not necessary. Ang bumaba ang value DMCI holdings

[30:34] Ang bumaba ang value DMCI holdings mother corporation but not DMCI mining.

[30:39] mother corporation but not DMCI mining. Okay? Ganun din yan. So SM San Miguel

[30:42] Okay? Ganun din yan. So SM San Miguel Corporation

[30:44] Corporation um John Gokong way group of companies.

[30:49] um John Gokong way group of companies. So basically that's how our economy is

[30:52] So basically that's how our economy is in the country right now. We're being

[30:54] in the country right now. We're being run by conglomerates in the country.

[30:57] run by conglomerates in the country. So

[30:59] So um if you if you're very familiar with

[31:03] um if you if you're very familiar with how these companies are set up then more

[31:06] how these companies are set up then more or less yung corporate law practice niyo

[31:08] or less yung corporate law practice niyo won't be that um um at least if kung

[31:14] won't be that um um at least if kung gusto niyong mag-focus sa corporate law

[31:15] gusto niyong mag-focus sa corporate law practice andun ang karamihan ng um mga

[31:19] practice andun ang karamihan ng um mga big corporations no sa mga conglomerates

[31:23] big corporations no sa mga conglomerates um also um smaller corporations

[31:27] um also um smaller corporations Um

[31:29] Um kung gusto niyo lang ang advice ko lang

[31:30] kung gusto niyo lang ang advice ko lang is kung gusto niyong mag-enouse council

[31:32] is kung gusto niyong mag-enouse council syempre doon kayo sa mga malalaking

[31:34] syempre doon kayo sa mga malalaking corporations global.

[31:37] corporations global. That's where the corporate practice you

[31:39] That's where the corporate practice you is merong maliliit na corporations but

[31:43] is merong maliliit na corporations but it's better to be an external council.

[31:46] it's better to be an external council. just provide uh you just provide

[31:49] just provide uh you just provide legal advice or kuha lang kayo ng

[31:51] legal advice or kuha lang kayo ng retainer for those smallers.

[31:58] Any other questions?

[32:01] Any other questions? So interesting ano ganyan yung setup

[32:03] So interesting ano ganyan yung setup niya. So um later on we'll be reviewing

[32:07] niya. So um later on we'll be reviewing on we'll be studying the grandfather

[32:09] on we'll be studying the grandfather rule how it affects the um

[32:12] rule how it affects the um constitutional 6040 nationality

[32:15] constitutional 6040 nationality requirement kasi maraming nags-skirt ng

[32:18] requirement kasi maraming nags-skirt ng nag ah nag se-circumvent ng um

[32:22] nag ah nag se-circumvent ng um nationality requirement ng constitution

[32:25] nationality requirement ng constitution what they do they do corporate layering.

[32:28] what they do they do corporate layering. So initially while pasok ka sa 6040

[32:30] So initially while pasok ka sa 6040 requirement but if you look at if you

[32:33] requirement but if you look at if you look deeper at the shareholders of the

[32:35] look deeper at the shareholders of the corporation puro pala

[32:38] corporation puro pala mga foreigners.

[32:41] mga foreigners. So there there are many cases on that no

[32:46] So there there are many cases on that no but the leading case really is Gamboa

[32:49] but the leading case really is Gamboa versus

[32:51] versus um with respect to the grandfather here

[32:54] um with respect to the grandfather here because um pagdating sa compliance sa

[32:59] because um pagdating sa compliance sa constitutional requirement 6040 rule

[33:02] constitutional requirement 6040 rule hindi enough na kung ano yung on on

[33:05] hindi enough na kung ano yung on on record na nakalagay sa stockholder book

[33:08] record na nakalagay sa stockholder book hindi enough yun kasi although Nakalista

[33:10] hindi enough yun kasi although Nakalista yun doun lahat kasi pag doun mo lang

[33:12] yun doun lahat kasi pag doun mo lang titingnan pwedeng complied na sila sa

[33:14] titingnan pwedeng complied na sila sa 6040.

[33:16] 6040. But if you look deeper, hindi pala ang

[33:19] But if you look deeper, hindi pala ang nagpapatakbo pala na mga some of the

[33:22] nagpapatakbo pala na mga some of the companies there are foreign nationals.

[33:25] companies there are foreign nationals. So that's why basically the essence of

[33:27] So that's why basically the essence of the the Gamboa ruling is that um it's

[33:31] the the Gamboa ruling is that um it's not just stock ownership but it's also

[33:35] not just stock ownership but it's also beneficial ownership

[33:37] beneficial ownership who controls the corporations uh who own

[33:41] who controls the corporations uh who own the subject corporation.

[33:45] And um so what are the business what are

[33:49] And um so what are the business what are the types of businesses that are covered

[33:51] the types of businesses that are covered under the constitutional require

[33:53] under the constitutional require nationality requirement under the

[33:54] nationality requirement under the constitution? Madami. We have media.

[33:58] constitution? Madami. We have media. Kita niyo you just look at the provision

[34:00] Kita niyo you just look at the provision that on article 12 found in article 12

[34:04] that on article 12 found in article 12 of in the constitution we have media

[34:06] of in the constitution we have media mining expectation of natural resources

[34:10] mining expectation of natural resources um definitely water is included. You

[34:13] um definitely water is included. You have energy the energy business.

[34:21] So um in relation to the crisis that's

[34:24] So um in relation to the crisis that's happening now. So if you notice

[34:29] happening now. So if you notice um kung meron bang nationality

[34:32] um kung meron bang nationality requirement

[34:34] requirement okay diyan yes meron national

[34:38] okay diyan yes meron national nationality requirementya. Okay. So

[34:41] nationality requirementya. Okay. So that's why you Shell you have Shell

[34:42] that's why you Shell you have Shell Philippines. It's not really um like the

[34:45] Philippines. It's not really um like the Shell Dutch company that's um running

[34:48] Shell Dutch company that's um running the business here in the country. Meron

[34:50] the business here in the country. Meron dinevron Chevron Philippines. It's not

[34:53] dinevron Chevron Philippines. It's not really the it's not really the

[34:56] really the it's not really the chevronest bas uh um abroad that's

[34:59] chevronest bas uh um abroad that's running the affairs here in the country.

[35:01] running the affairs here in the country. It's a separate it's a separate entity

[35:03] It's a separate it's a separate entity but obviously um it's pattered after you

[35:07] but obviously um it's pattered after you know the multinational business of of

[35:10] know the multinational business of of challenge ofron Petron is a different

[35:12] challenge ofron Petron is a different case kasi dating PNOC yan eh PNOC may

[35:15] case kasi dating PNOC yan eh PNOC may hawak niyan um and then it was bought it

[35:17] hawak niyan um and then it was bought it was privatized.

[35:20] was privatized. Okay. Um and then you have new players

[35:23] Okay. Um and then you have new players no ever since um the oil industry have

[35:26] no ever since um the oil industry have been regulated dumabi na yung mga

[35:29] been regulated dumabi na yung mga private um companies who entered the oil

[35:33] private um companies who entered the oil industry. So now you have sea oil mga

[35:37] industry. So now you have sea oil mga ganyan you have phoenix etc etc. dumami

[35:40] ganyan you have phoenix etc etc. dumami na sila and um it's really it's it has

[35:43] na sila and um it's really it's it has become more of um uh

[35:48] become more of um uh um

[35:50] um ang issue ang issue na dito is parang

[35:52] ang issue ang issue na dito is parang plain and simple law on supply no supply

[35:55] plain and simple law on supply no supply and demand issue law on supply and

[35:57] and demand issue law on supply and demand issue na so kaya tumataas yung

[36:00] demand issue na so kaya tumataas yung presyo because basically what's

[36:01] presyo because basically what's happening in the market right now

[36:06] okay medyo complicated yan let's Um,

[36:10] okay medyo complicated yan let's Um, balik na tayo sa topic natin no sa sa

[36:13] balik na tayo sa topic natin no sa sa corporate powers.

[36:18] Okay lang po magasarification.

[36:22] >> Yes.

[36:24] >> Yes. Just in relation to your questions

[36:26] Just in relation to your questions earlier.

[36:27] earlier. >> Yes.

[36:28] >> Yes. >> Yes po Attorney. Um so

[36:32] >> Yes po Attorney. Um so few of my classmates answers different

[36:34] few of my classmates answers different uh answers.

[36:36] uh answers. Um so based on this based on my

[36:39] Um so based on this based on my understanding

[36:41] understanding um a corporation

[36:43] um a corporation can be in manufacturing in loans etc etc

[36:49] can be in manufacturing in loans etc etc as long as it's provided under the

[36:51] as long as it's provided under the article of the incorporation or um

[36:59] article of the incorporation or um it must have a separate uh group

[37:03] it must have a separate uh group which is which has a vertical

[37:05] which is which has a vertical relationship

[37:06] relationship in a company

[37:09] in a company >> no yung verticalung vertical integration

[37:11] >> no yung verticalung vertical integration remember even in vertical integration

[37:14] remember even in vertical integration the holding company is not really do

[37:17] the holding company is not really do performing the operations so it's not

[37:19] performing the operations so it's not really engaged for example um yung

[37:22] really engaged for example um yung example natin kanina ba si universal

[37:25] example natin kanina ba si universal rubina corporation ang holding company

[37:28] rubina corporation ang holding company nila is JG summit JG Summit is not the

[37:32] nila is JG summit JG Summit is not the one do is doing the business of ah

[37:36] one do is doing the business of ah Universal Rubina Corporation.

[37:38] Universal Rubina Corporation. Stock ownership lang siya. So iba yun

[37:41] Stock ownership lang siya. So iba yun kasi ang business ni ang if you look at

[37:44] kasi ang business ni ang if you look at the articles of incorporation ni JG

[37:47] the articles of incorporation ni JG Summit, ang nakalagay doon um parang to

[37:52] Summit, ang nakalagay doon um parang to invest no to invest in corporations. So

[37:56] invest no to invest in corporations. So yun yung primary purpose niya. So yun

[38:00] yun yung primary purpose niya. So yun lang mag-invest siya and then dividends

[38:02] lang mag-invest siya and then dividends get dividends ba yun yung business niya.

[38:05] get dividends ba yun yung business niya. So it's the mother corporation but it's

[38:07] So it's the mother corporation but it's not allowed to operate Universal Rubina

[38:11] not allowed to operate Universal Rubina Corporation in the same way that it's

[38:13] Corporation in the same way that it's not allowed to allowed to operate Cebu

[38:15] not allowed to allowed to operate Cebu Pacific.

[38:18] Pacific. Ganun siya. So iba. So for example

[38:23] Ganun siya. So iba. So for example you look at Universal Rubina Corporation

[38:26] you look at Universal Rubina Corporation Universal Rubina Corporation

[38:28] Universal Rubina Corporation cannot invest because it's not in its

[38:31] cannot invest because it's not in its primary per it's not it's not expressly

[38:35] primary per it's not it's not expressly provided for in its uh articles of

[38:38] provided for in its uh articles of incorporation.

[38:41] incorporation. So ang question mo ngayon is so attorney

[38:44] So ang question mo ngayon is so attorney kung nakalagay naman lahat sa articles

[38:47] kung nakalagay naman lahat sa articles sa primary primary purpos articles

[38:51] sa primary primary purpos articles articles of incorporation mo yung

[38:52] articles of incorporation mo yung primary purposes mo yung iba-ibang types

[38:56] primary purposes mo yung iba-ibang types of business pwede na ba yon

[39:00] of business pwede na ba yon ang sagot hindi kayo bibigyan ng

[39:03] ang sagot hindi kayo bibigyan ng lisensya ni FEC

[39:06] lisensya ni FEC yan ang sagot diyan

[39:09] yan ang sagot diyan bakit Eh magulo 'yun eh.

[39:12] bakit Eh magulo 'yun eh. 'Di ba? Magulo 'yung setup na 'yun.

[39:14] 'Di ba? Magulo 'yung setup na 'yun. Lahat na lang ng types of businesses

[39:16] Lahat na lang ng types of businesses gagawin mo.

[39:19] gagawin mo. You're going to confuse the public.

[39:20] You're going to confuse the public. you're also going to confuse um the

[39:26] you're also going to confuse um the the you know the commerce behind um um

[39:30] the you know the commerce behind um um or the the visit kumbaga kumbaga the

[39:34] or the the visit kumbaga kumbaga the part of SEC mahirap kang i-regulate

[39:38] part of SEC mahirap kang i-regulate kasi ano ka ba anong purpose mo that's

[39:42] kasi ano ka ba anong purpose mo that's why it's the easiest the easiest ang

[39:45] why it's the easiest the easiest ang pinaka generic diyan is yung yung buy

[39:49] pinaka generic diyan is yung yung buy and sell ' ba

[39:53] and sell ' ba general trading marami ng pwede maraming

[39:57] general trading marami ng pwede maraming pwedeng pumasok diyan eh so ano kasama

[40:01] pwedeng pumasok diyan eh so ano kasama doon pwede kang mag-marketing pwede kang

[40:04] doon pwede kang mag-marketing pwede kang mag of course mag-trading

[40:07] mag of course mag-trading magbenta you know etc etc

[40:12] magbenta you know etc etc any product pwede any product 'di ba for

[40:16] any product pwede any product 'di ba for example importer ka ng ch sa ng example

[40:20] example importer ka ng ch sa ng example Chinese products 'di ba? Pupunta ka ng

[40:22] Chinese products 'di ba? Pupunta ka ng China maghahanap ka ng mga mumurang

[40:25] China maghahanap ka ng mga mumurang bibilhin

[40:27] bibilhin regardless of what product ' ba. Pwedeng

[40:29] regardless of what product ' ba. Pwedeng pwedeng IT products yan pwedeng

[40:33] pwedeng IT products yan pwedeng mga damit yan fast passion pwedeng

[40:37] mga damit yan fast passion pwedeng mag-import ka ng um pagkain

[40:42] mag-import ka ng um pagkain pasok tapos ano business mo buy and then

[40:47] pasok tapos ano business mo buy and then sell it to the public.

[40:49] sell it to the public. ba doesn't matter ba still good ba iba

[40:53] ba doesn't matter ba still good ba iba naman yun sa service ba iba ang service

[40:56] naman yun sa service ba iba ang service ba you're selling products naman you're

[40:59] ba you're selling products naman you're buying products you're selling products

[41:02] buying products you're selling products pero if papas pag papasok ka na sa medyo

[41:06] pero if papas pag papasok ka na sa medyo ano ba yun um highly regulated

[41:09] ano ba yun um highly regulated businesses like for example water

[41:12] businesses like for example water 'di ba hindi mo na hindi kasi the

[41:16] 'di ba hindi mo na hindi kasi the license of engaging in water business is

[41:19] license of engaging in water business is parang ano eh separate eh. Kukuha ka ng

[41:23] parang ano eh separate eh. Kukuha ka ng permit sa MWRB,

[41:25] permit sa MWRB, kukuha ka ng permit sa marami kang

[41:28] kukuha ka ng permit sa marami kang permit kukunin. Okay? The same way as

[41:31] permit kukunin. Okay? The same way as mining. Mining is a is a highly

[41:34] mining. Mining is a is a highly regulated business. Hindi pwedeng may

[41:37] regulated business. Hindi pwedeng may mining ka tapos meron kang ah

[41:41] mining ka tapos meron kang ah importation, meron kang or logistics.

[41:44] importation, meron kang or logistics. Magulo yun

[41:46] Magulo yun ba magulo yung business na yon and you

[41:49] ba magulo yung business na yon and you will not baka ang problema non hindi ka

[41:51] will not baka ang problema non hindi ka bibigyan ng permit

[41:55] bibigyan ng permit kasi may mga regulations

[41:58] kasi may mga regulations special regulations for mining.

[42:02] special regulations for mining. So for example si si M si Dr

[42:05] So for example si si M si Dr para ming permit dapat pasok ka sa sa

[42:09] para ming permit dapat pasok ka sa sa mga sa mga requirements

[42:13] mga sa mga requirements eh paano kung yung ang and I think and

[42:15] eh paano kung yung ang and I think and as far as I know the requirements one of

[42:17] as far as I know the requirements one of the requirements is meron kang um meron

[42:22] the requirements is meron kang um meron kang financial and technical capacity to

[42:25] kang financial and technical capacity to do so eh paano kung pinakita mo okay

[42:29] do so eh paano kung pinakita mo okay naglo-logistics ka nag magulo yung

[42:31] naglo-logistics ka nag magulo yung business mo.

[42:33] business mo. DNR will say easily say wala kang

[42:36] DNR will say easily say wala kang technical capacity ang dami mong

[42:38] technical capacity ang dami mong ginagawa.

[42:42] Wala rin ' ba. So that's what I'm

[42:48] Wala rin ' ba. So that's what I'm siguro what I'm trying to point out is

[42:50] siguro what I'm trying to point out is it's

[42:52] it's really it's really not possible.

[42:54] really it's really not possible. Technically it's not possible. kumbaga

[42:56] Technically it's not possible. kumbaga attorney it's one corporation uh

[43:00] attorney it's one corporation uh must have one primary purpose only other

[43:03] must have one primary purpose only other than that it's invalid that's the idea

[43:06] than that it's invalid that's the idea setup that's the ideal setup kaya

[43:10] setup that's the ideal setup kaya nagkakaroon lang ng vertical integration

[43:14] nagkakaroon lang ng vertical integration nagkakaroon lang ng vertical integration

[43:17] nagkakaroon lang ng vertical integration um

[43:19] um okay I hope that's clear so very ano ah

[43:22] okay I hope that's clear so very ano ah iyung SEC legal opinyon na iyon you know

[43:25] iyung SEC legal opinyon na iyon you know that's still um stands as of today.

[43:28] that's still um stands as of today. Okay. So you're engaged in

[43:30] Okay. So you're engaged in manufacturing. So for example Mondinisen

[43:34] manufacturing. So for example Mondinisen 'di ba manufacturing of food products ba

[43:38] 'di ba manufacturing of food products ba Monisen

[43:40] Monisen yun langung dapat ah nak nakaindicate

[43:45] yun langung dapat ah nak nakaindicate din no sa articles of incorporation mo

[43:49] din no sa articles of incorporation mo that you're also going to engage in

[43:51] that you're also going to engage in distribution of your own product.

[43:55] Yan pwede yan kasi it's your own product

[43:58] Yan pwede yan kasi it's your own product eh. Okay? Iba ibang iba yung yung

[44:02] eh. Okay? Iba ibang iba yung yung question mo kanina. For example,

[44:04] question mo kanina. For example, logistics, mining tapos meron ka pang

[44:08] logistics, mining tapos meron ka pang finance mga financial products. Malabo

[44:10] finance mga financial products. Malabo yon. Okay? It must be in a way related

[44:14] yon. Okay? It must be in a way related to your kumbaga kumbaga you have your

[44:17] to your kumbaga kumbaga you have your business model, right? Your business

[44:19] business model, right? Your business model is manufacturing and then

[44:23] model is manufacturing and then distribution. Pwede yun but it has to be

[44:26] distribution. Pwede yun but it has to be clear in your articles. Pwede ring

[44:28] clear in your articles. Pwede ring business model ko manufacturing lang.

[44:33] business model ko manufacturing lang. Yun lang nakalagay sa articles.

[44:36] Yun lang nakalagay sa articles. 'Di ba?

[44:39] 'Di ba? Now the question is kung ano ba yung

[44:41] Now the question is kung ano ba yung gagawin mo, it will now it will now be

[44:45] gagawin mo, it will now it will now be based on your um business judgment.

[44:50] based on your um business judgment. Okay. Kung sa tingin mo kaya ko ong

[44:52] Okay. Kung sa tingin mo kaya ko ong gawin, kaya kong ipatakbo yung business

[44:54] gawin, kaya kong ipatakbo yung business ko na manufacturing tsaka um

[44:59] ko na manufacturing tsaka um distribution

[45:01] distribution go ahead do so. You will earn more

[45:03] go ahead do so. You will earn more profits that way. Okay. Pero if tingin

[45:07] profits that way. Okay. Pero if tingin mo no, focus muna ako sa manufacturing.

[45:09] mo no, focus muna ako sa manufacturing. Dito muna ako. Kikita ako dito ng

[45:12] Dito muna ako. Kikita ako dito ng malaki. Bahala na yung distribution arm.

[45:14] malaki. Bahala na yung distribution arm. Ayawo ng sakit sa ulo. Pwede ganon. It

[45:16] Ayawo ng sakit sa ulo. Pwede ganon. It depends. Case to case basis yan.

[45:21] depends. Case to case basis yan. So

[45:23] So um but ayan so yan yung medyo related

[45:26] um but ayan so yan yung medyo related manufacturing distribution and then um

[45:31] manufacturing distribution and then um distribution and kasama kasama sa

[45:34] distribution and kasama kasama sa distribution ang selling okay ang

[45:37] distribution ang selling okay ang manufacturing iba okay so that's clear

[45:41] manufacturing iba okay so that's clear from the SEC opinion the distribution

[45:44] from the SEC opinion the distribution pwede kang magbenta pwede kang magmarket

[45:49] just to be clear.

[45:52] just to be clear. Okay.

[45:53] Okay. >> Thank you for

[45:56] >> Thank you for >> all right. Um

[46:02] there is such a thing as the stretching

[46:04] there is such a thing as the stretching the purpose clause rule. The SEC adopted

[46:07] the purpose clause rule. The SEC adopted the stretching of purpose clauses rule

[46:09] the stretching of purpose clauses rule under which it is legal to stretch the

[46:12] under which it is legal to stretch the meaning of the purpose clause to cover

[46:15] meaning of the purpose clause to cover unexpected situations. Situations and

[46:18] unexpected situations. Situations and circumstances may arise which could not

[46:20] circumstances may arise which could not have been foresen at the time of

[46:22] have been foresen at the time of incorporation that can be accommodated

[46:25] incorporation that can be accommodated by the stretched interpretation of the

[46:27] by the stretched interpretation of the purpose clause. There is no more need to

[46:31] purpose clause. There is no more need to amend the articles of incorporation to

[46:33] amend the articles of incorporation to accommodate new situations. For

[46:36] accommodate new situations. For instance, a provision in the articles

[46:39] instance, a provision in the articles allowing a corporation to contract with

[46:41] allowing a corporation to contract with other local and international

[46:44] other local and international organizations

[46:45] organizations may be stretched and construed in such a

[46:48] may be stretched and construed in such a way as to allow the corporation to

[46:51] way as to allow the corporation to donations to a foreign oranation.

[47:01] So I'll just give you example no. So the

[47:05] So I'll just give you example no. So the articles of incorporation of X

[47:07] articles of incorporation of X corporation states

[47:10] corporation states the primary purpose of this corporation

[47:12] the primary purpose of this corporation is to engage in the business of

[47:14] is to engage in the business of manufacturing goods such as jewelry and

[47:17] manufacturing goods such as jewelry and to trade the same on wholesale.

[47:21] to trade the same on wholesale. Is it qualified to engage in jewelry

[47:24] Is it qualified to engage in jewelry and refining activities if the same is

[47:26] and refining activities if the same is not expressly provided for as secondary

[47:28] not expressly provided for as secondary purpose?

[47:30] purpose? Okay. So according to uh the SEC the

[47:35] Okay. So according to uh the SEC the answer is yes. Jewelry assaying and

[47:38] answer is yes. Jewelry assaying and refining activities are implied powers

[47:41] refining activities are implied powers of the corporation.

[47:45] Another problem the primary purpose of X

[47:48] Another problem the primary purpose of X corporation is to carry mineral

[47:50] corporation is to carry mineral exploration and exploitation.

[47:53] exploration and exploitation. Exploration and exploitation. Can it

[47:56] Exploration and exploitation. Can it engage in money or crewing business?

[48:00] engage in money or crewing business? The answer is

[48:02] The answer is no.

[48:04] no. The corporation cannot engage in crewing

[48:06] The corporation cannot engage in crewing business because the same is not

[48:08] business because the same is not expressly stated and cannot be implied

[48:11] expressly stated and cannot be implied from the business of mineral exploration

[48:15] from the business of mineral exploration and exploitation.

[48:18] and exploitation. Okay.

[48:23] Another one. Okay. So ito yyung primary.

[48:26] Another one. Okay. So ito yyung primary. Ito yung purpose clause niya. to engage

[48:29] Ito yung purpose clause niya. to engage in and carry on a general mercantile and

[48:33] in and carry on a general mercantile and commercial business of buying

[48:37] commercial business of buying acquiring

[48:39] acquiring holding

[48:41] holding importing and exporting selling or

[48:44] importing and exporting selling or otherwise disposing of and dealing in

[48:47] otherwise disposing of and dealing in any goods merchandise commodities

[48:50] any goods merchandise commodities particularly computer and its

[48:53] particularly computer and its peripherals, electronic, industrial

[48:56] peripherals, electronic, industrial and engineering. items.

[49:00] and engineering. items. Can x corporation

[49:02] Can x corporation lawfully entered into computer

[49:06] lawfully entered into computer maintenance service contracts?

[49:12] The answer is

[49:14] The answer is no.

[49:17] no. Okay. No, the purpose clause does not

[49:20] Okay. No, the purpose clause does not authorize the corporation to engage in

[49:22] authorize the corporation to engage in computer maintenance service.

[49:31] So, I'm just giving you examples so more

[49:33] So, I'm just giving you examples so more or less you get the idea. Okay.

[49:38] or less you get the idea. Okay. Another one,

[49:42] the purpose clause of a corporation

[49:45] the purpose clause of a corporation states.

[49:46] states. Ayan, sige, what I'll do na lang, I'll

[49:48] Ayan, sige, what I'll do na lang, I'll post it.

[49:50] post it. Okay, I'll post it in the chat box and

[49:53] Okay, I'll post it in the chat box and then let's see

[49:56] then let's see what your answers are.

[49:59] what your answers are. Obviously ito na to lalabas sa ninyo.

[50:47] You can type your answers.

[51:07] Ito mga ganitong tanong. Mga pang bar to

[51:12] yung mga ganitong tanong sa bar.

[51:24] M huwag niyo namang iano-chat

[51:28] magcha-chat GPT pa kayo. Grabe naman ko.

[51:32] magcha-chat GPT pa kayo. Grabe naman ko. Sige na

[51:33] Sige na bilis.

[51:36] bilis. Huwag ni iano yan oh. Yes. This is O.

[51:39] Huwag ni iano yan oh. Yes. This is O. No. Yes. Yes. W hindi naman graded yan

[51:42] No. Yes. Yes. W hindi naman graded yan eh. Oh. Oh yes yes

[51:55] >> one. I see. How many yes? Parang mas

[51:59] >> one. I see. How many yes? Parang mas madami yung yes. Ano?

[52:03] Madami yung yes.

[52:06] Madami yung yes. Alam mo meron talagang riple effect

[52:08] Alam mo meron talagang riple effect minsan eh no? Pag sinimulan ng isa

[52:10] minsan eh no? Pag sinimulan ng isa susunod yung iba.

[52:14] susunod yung iba. No people effect parang damay-damay

[52:18] No people effect parang damay-damay ba

[52:20] ba oo

[52:22] oo so the answer is no memorial part

[52:26] so the answer is no memorial part business is not expressly included in

[52:29] business is not expressly included in the purpose clause of the articles

[52:32] the purpose clause of the articles neither is the activity necessary

[52:34] neither is the activity necessary orcidental in the further of the

[52:37] orcidental in the further of the corporation present which

[52:41] corporation present which Realty accordingly the corporation

[52:43] Realty accordingly the corporation cannot on the basis of its present

[52:45] cannot on the basis of its present purpose

[52:47] purpose engage in memorial part business.

[52:52] engage in memorial part business. Iba kasi ang memorial part business sa

[52:55] Iba kasi ang memorial part business sa realty business.

[52:57] realty business. Mm.

[52:59] Mm. Yun ang sabi ng SCC. Another one.

[53:39] Sabi ni Miss Kisan no

[53:42] Sabi ni Miss Kisan no bilis Miss Kisan.

[53:45] bilis Miss Kisan. How about the rest?

[53:49] How about the rest? No. No. Ayan na yung ano.

[53:52] No. No. Ayan na yung ano. Hawa-hawa na to. Ayan. Mr. Calabia. Yes,

[54:03] an

[54:10] sale of cellular phones, accessories and

[54:13] sale of cellular phones, accessories and other telecommunications

[54:15] other telecommunications equipment can be considered implied

[54:18] equipment can be considered implied power. They are allowed because the sale

[54:21] power. They are allowed because the sale of the properties is reasonably required

[54:24] of the properties is reasonably required by the lawful transaction of its

[54:27] by the lawful transaction of its business expressed in the purpose

[54:29] business expressed in the purpose clause.

[54:31] clause. Okay.

[54:33] Okay. The sale of those products is a part of

[54:35] The sale of those products is a part of its telecommunication services to the

[54:39] its telecommunication services to the public.

[54:52] So sometimes the trick there is how you

[54:55] So sometimes the trick there is how you word your purpose,

[54:57] word your purpose, okay? How worded it's very important.

[55:09] So let's move on. Okay. So let's look at

[55:14] So let's move on. Okay. So let's look at the other powers of the of a

[55:15] the other powers of the of a corporation. So um the next power is the

[55:19] corporation. So um the next power is the power to sell proper to sell real

[55:21] power to sell proper to sell real properties. A corporation may sell or

[55:24] properties. A corporation may sell or convey its real properties subject to

[55:26] convey its real properties subject to the limitations prescribed by law and

[55:29] the limitations prescribed by law and the constitution. The property of a

[55:31] the constitution. The property of a corporation is not the property of the

[55:33] corporation is not the property of the stockholders. or

[55:37] stockholders. or may not be sold without express

[55:39] may not be sold without express authority from the board of directors

[55:42] authority from the board of directors acts like the offering of the properties

[55:45] acts like the offering of the properties of the corporation for sale or the

[55:47] of the corporation for sale or the acceptance of a counter offer of

[55:50] acceptance of a counter offer of prospective buyers of such properties

[55:52] prospective buyers of such properties and the execution of the deed of sale

[55:55] and the execution of the deed of sale covering such properties can be

[55:57] covering such properties can be performed by the corporation only by

[56:00] performed by the corporation only by officers or agents duly authorized for

[56:03] officers or agents duly authorized for the purpose

[56:06] by the any s of property of a

[56:11] by the any s of property of a corporation by a person

[56:14] corporation by a person to be agent but without written

[56:17] to be agent but without written authority from the corporation is what

[56:21] authority from the corporation is what voidable or void

[56:32] let's see. Sige. Let's wait for the

[56:33] let's see. Sige. Let's wait for the answers of

[56:37] the rest of your classmates. Void. Mr.

[56:40] the rest of your classmates. Void. Mr. Earth is void. Voidan void. Void. Ang

[56:43] Earth is void. Voidan void. Void. Ang galing. Very good. Your answer is

[56:46] galing. Very good. Your answer is correct. Very good. Very good. Yan lang

[56:49] correct. Very good. Very good. Yan lang yung provision na void express kasi no.

[56:54] yung provision na void express kasi no. What's a statutory? It's in it's found

[56:57] What's a statutory? It's in it's found in the civil code

[57:00] in the civil code so yan lang. Okay. Basta pagdating sa

[57:03] so yan lang. Okay. Basta pagdating sa real property, walang authority ang

[57:06] real property, walang authority ang agent

[57:08] agent automatic void.

[57:11] automatic void. Okay. But if you notice in you know in

[57:14] Okay. But if you notice in you know in our cases, you know, in the previous

[57:15] our cases, you know, in the previous sessions mga contracts, mga ganyan, it's

[57:20] sessions mga contracts, mga ganyan, it's only voidable ' ba? Voidable lang siya.

[57:30] Power to mortgage real property. So it's

[57:34] Power to mortgage real property. So it's a keen to the power to sell properties.

[57:36] a keen to the power to sell properties. A special power of attorney is necessary

[57:39] A special power of attorney is necessary to create or convey real rights over a

[57:42] to create or convey real rights over a movable property. Furthermore, the

[57:44] movable property. Furthermore, the special power of attorney must appear in

[57:46] special power of attorney must appear in a public document.

[57:48] a public document. In the absence of a special power of

[57:50] In the absence of a special power of attorney, even the president of the

[57:53] attorney, even the president of the corporation cannot enter into a

[57:55] corporation cannot enter into a validage.

[58:03] The power to borrow money. The parrow to

[58:06] The power to borrow money. The parrow to borrow money is one of the cases, one of

[58:08] borrow money is one of the cases, one of those cases where corporate officers as

[58:11] those cases where corporate officers as agents of the corporation need a special

[58:14] agents of the corporation need a special power of

[58:16] power of attorney.

[58:21] Section 36 of the revised corporation

[58:23] Section 36 of the revised corporation code provides the power to extend or

[58:26] code provides the power to extend or shorten corporate term.

[58:29] shorten corporate term. Okay. Pero medyo ano na to no? Medyo

[58:32] Okay. Pero medyo ano na to no? Medyo hindi na rin to ganon cooperative

[58:34] hindi na rin to ganon cooperative because right now if you're going to

[58:37] because right now if you're going to incorporate a corporation business

[58:40] incorporate a corporation business entity

[58:42] entity it's going to have perpetual existence

[58:46] it's going to have perpetual existence already.

[58:48] already. Section 37 the power to increase or

[58:51] Section 37 the power to increase or decrease capital stock incur or create

[58:55] decrease capital stock incur or create incurre

[58:57] incurre bonded indodal

[59:03] provision

[59:09] just take note

[59:12] just take note from this section increase in subscribed

[59:15] from this section increase in subscribed capital

[59:17] capital and paid up capital is not covered.

[59:20] and paid up capital is not covered. Okay.

[59:33] So the operative word there is

[59:37] So the operative word there is subscribe. Okay?

[59:39] subscribe. Okay? Iba yun. Iba yung subscribe capital

[59:43] Iba yun. Iba yung subscribe capital stock, okay? And paid up capital sa

[59:45] stock, okay? And paid up capital sa authorized capital stock. Authorized

[59:48] authorized capital stock. Authorized capital stock kasi yan yung nakalagay sa

[59:51] capital stock kasi yan yung nakalagay sa articles of incorporation.

[59:54] articles of incorporation. So that's why you have to get um

[59:58] So that's why you have to get um stockholders

[01:00:00] stockholders um approval at least 23d of the

[01:00:03] um approval at least 23d of the outstanding capital stock at the

[01:00:06] outstanding capital stock at the stockholders.

[01:00:14] So just take note um for the increase or

[01:00:18] So just take note um for the increase or decrease of authorized capital stock the

[01:00:20] decrease of authorized capital stock the requirements is first it must be

[01:00:22] requirements is first it must be approved by a majority vote of the

[01:00:25] approved by a majority vote of the board.

[01:00:27] board. Second, approved by at least 23d of the

[01:00:30] Second, approved by at least 23d of the outstanding capital stock at the

[01:00:32] outstanding capital stock at the stockholders meeting July called for the

[01:00:34] stockholders meeting July called for the purpose. Third, a certificate signed by

[01:00:38] purpose. Third, a certificate signed by a majority of the directors of the

[01:00:41] a majority of the directors of the corporation encounter signed by the

[01:00:43] corporation encounter signed by the chairperson of the board and the

[01:00:45] chairperson of the board and the secretary of the corporation setting

[01:00:48] secretary of the corporation setting forth that the requirements found in

[01:00:50] forth that the requirements found in section 37 have been complied with the

[01:00:54] section 37 have been complied with the amount of the increase or decrease of

[01:00:56] amount of the increase or decrease of the capital stock. In case of an

[01:00:59] the capital stock. In case of an increase of the capital stock, the

[01:01:00] increase of the capital stock, the amount of capital stock of or number of

[01:01:03] amount of capital stock of or number of shares of no par stock there of actually

[01:01:06] shares of no par stock there of actually subscribe. The names, nationalities and

[01:01:09] subscribe. The names, nationalities and addresses of the person subscribed.

[01:01:13] addresses of the person subscribed. Amount of capital stock or or number of

[01:01:16] Amount of capital stock or or number of no par stocks subscribed by each and the

[01:01:20] no par stocks subscribed by each and the amount paid by each on the subscription

[01:01:23] amount paid by each on the subscription in cash or property.

[01:01:26] in cash or property. It must also include the amount of stock

[01:01:28] It must also include the amount of stock represented at the meeting and the vote

[01:01:32] represented at the meeting and the vote authorizing the increase or decrease of

[01:01:34] authorizing the increase or decrease of the capital stock.

[01:01:38] also be a treasur affidavit

[01:01:43] also be a treasur affidavit and approval of the amend articles

[01:01:46] and approval of the amend articles ofation by

[01:02:10] Take note

[01:02:12] Take note of the denial of the quiz in authorized

[01:02:16] of the denial of the quiz in authorized capital stock.

[01:02:19] The rule is that no decrease in capital

[01:02:23] The rule is that no decrease in capital stock shall be approved by the

[01:02:26] stock shall be approved by the commission

[01:02:28] commission SEC if its effect shall prejudice the

[01:02:31] SEC if its effect shall prejudice the rights of corporate creditors

[01:02:36] rights of corporate creditors otherwise known as this is this is also

[01:02:40] otherwise known as this is this is also pursuant to the trust fund doctrine.

[01:02:44] pursuant to the trust fund doctrine. Okay. is consistent with the trust fund

[01:02:47] Okay. is consistent with the trust fund doctrine. Trust fund doctrine if you

[01:02:50] doctrine. Trust fund doctrine if you recall provides that subscriptions to

[01:02:53] recall provides that subscriptions to the capital stock of a corporation

[01:02:56] the capital stock of a corporation constitute a fund to which the creditors

[01:03:00] constitute a fund to which the creditors have a right to look for the

[01:03:01] have a right to look for the satisfaction of their claims.

[01:03:04] satisfaction of their claims. A stockholder has no right to demand for

[01:03:07] A stockholder has no right to demand for the return of his investment. His

[01:03:09] the return of his investment. His investment is locked in until

[01:03:12] investment is locked in until liquidation of the corporation. A

[01:03:15] liquidation of the corporation. A stockholder cannot without violating the

[01:03:18] stockholder cannot without violating the trust fund doctrine compel the

[01:03:20] trust fund doctrine compel the corporation to return his investments

[01:03:23] corporation to return his investments without the consent of all the

[01:03:25] without the consent of all the stockholders. Neither does he have the

[01:03:27] stockholders. Neither does he have the right to withdraw even when all stock

[01:03:29] right to withdraw even when all stock holders assent if it will prejudice the

[01:03:33] holders assent if it will prejudice the creditors.

[01:03:38] What is the rational? The rational is

[01:03:42] What is the rational? The rational is this. Okay.

[01:03:45] this. Okay. Uh if you will allow this from happening

[01:03:50] Uh if you will allow this from happening it will uh cause the depletion

[01:03:54] it will uh cause the depletion by

[01:03:56] by a corporation of its assets and

[01:03:59] a corporation of its assets and therefore the impairment of its capital

[01:04:02] therefore the impairment of its capital needed for the protection of

[01:04:09] a possibility of

[01:04:14] Why?

[01:04:16] Why? Uh like uh what we've been trying and

[01:04:19] Uh like uh what we've been trying and what we've been trying to avoid the

[01:04:21] what we've been trying to avoid the investments,

[01:04:23] investments, right?

[01:04:26] Ah okay. Meron kang um investment sa

[01:04:30] Ah okay. Meron kang um investment sa corporation ' ba. For example, pasok ka

[01:04:34] corporation ' ba. For example, pasok ka ng 1,000, alam m nalulugi na ng

[01:04:37] ng 1,000, alam m nalulugi na ng corporation,

[01:04:39] corporation, in-approve mo yung ah decrease of

[01:04:42] in-approve mo yung ah decrease of authorized capital stock, ibig sabihin

[01:04:44] authorized capital stock, ibig sabihin pwede mong babaan yung pwede pwede kang

[01:04:47] pwede mong babaan yung pwede pwede kang magtanggal ng investment.

[01:04:49] magtanggal ng investment. Pero during the operations of the

[01:04:51] Pero during the operations of the business of a corporation,

[01:04:54] business of a corporation, meron siyang mga kontrata with creditors

[01:04:56] meron siyang mga kontrata with creditors from suppliers. Okay. Sinong affected

[01:05:01] from suppliers. Okay. Sinong affected ag hindi maka sinong affected? Syempre

[01:05:03] ag hindi maka sinong affected? Syempre ang creditors ng corporation ba bababa

[01:05:06] ang creditors ng corporation ba bababa yung capital ng business eh. De-decrease

[01:05:12] yung capital ng business eh. De-decrease mo yung

[01:05:14] mo yung yung yung capital ng business, yung

[01:05:17] yung yung capital ng business, yung assets niya. Wwit ka.

[01:05:22] assets niya. Wwit ka. It will be a it will be a cost for

[01:05:24] It will be a it will be a cost for possible.

[01:05:27] possible. Right? Later on napakadali mag ano

[01:05:31] Right? Later on napakadali mag ano magtakbo ng ng ano pera kung ganon. Bu

[01:05:35] magtakbo ng ng ano pera kung ganon. Bu you have um corporate

[01:05:39] you have um corporate corporation has its own separate

[01:05:40] corporation has its own separate juridical personality right hindi ka

[01:05:44] juridical personality right hindi ka mahihirapan kang maghabol

[01:05:47] mahihirapan kang maghabol ng pera

[01:05:49] ng pera kapag

[01:05:51] kapag especially if it's done maliciously

[01:05:53] especially if it's done maliciously by the stockholders of a corporation.

[01:05:57] by the stockholders of a corporation. ba magwi-withdraw lang sila ng ng

[01:05:59] ba magwi-withdraw lang sila ng ng kanilang investments babawasan yung

[01:06:02] kanilang investments babawasan yung assets ng corporation tatakbuhan

[01:06:05] assets ng corporation tatakbuhan okay that is that is why the rule is

[01:06:08] okay that is that is why the rule is that

[01:06:10] that um the decrease of the authorized

[01:06:12] um the decrease of the authorized capital stock must not impir

[01:06:15] capital stock must not impir the rights of the creditors. So paano

[01:06:18] the rights of the creditors. So paano iyan ino-operationalize? So sa mga

[01:06:21] iyan ino-operationalize? So sa mga accountants, I think you can explain

[01:06:23] accountants, I think you can explain this. Pero um there's such a thing as I

[01:06:27] this. Pero um there's such a thing as I think um

[01:06:30] think um iyung

[01:06:32] iyung liability to uh assets ratio

[01:06:37] liability to uh assets ratio okay of a company. So if that will be

[01:06:40] okay of a company. So if that will be affected ibig sabihin if by decreasing

[01:06:43] affected ibig sabihin if by decreasing the assets of a corporation tataas lang

[01:06:46] the assets of a corporation tataas lang yung yung liabilities mo in such a way

[01:06:50] yung yung liabilities mo in such a way na hindi ka na makakapagbayad.

[01:06:53] na hindi ka na makakapagbayad. Wala ka ng wala ng then yung cash flow

[01:06:56] Wala ka ng wala ng then yung cash flow ng company no it's not earning.

[01:06:59] ng company no it's not earning. Then that would mean obviously mean on

[01:07:01] Then that would mean obviously mean on the part of the SEC that this should SEC

[01:07:05] the part of the SEC that this should SEC will not allow that to happen. The SEC

[01:07:07] will not allow that to happen. The SEC will review your financial statements.

[01:07:10] will review your financial statements. SC will look at your books and say na

[01:07:11] SC will look at your books and say na hindi meron ka pang utang sa mga

[01:07:14] hindi meron ka pang utang sa mga creditors mo. Hindi mo pa pwedeng hindi

[01:07:17] creditors mo. Hindi mo pa pwedeng hindi ka pa pwedeng mag-decrease ng authorized

[01:07:19] ka pa pwedeng mag-decrease ng authorized capital stock.

[01:07:21] capital stock. So the SEC has that power to review your

[01:07:23] So the SEC has that power to review your financial stats. That's why on a yearly

[01:07:25] financial stats. That's why on a yearly basis you're required to submit your GIS

[01:07:29] basis you're required to submit your GIS audited financial stat.

[01:07:49] So similarly you have requirements for

[01:07:53] So similarly you have requirements for creation and increase

[01:07:56] creation and increase of bonded indebtedness.

[01:07:59] of bonded indebtedness. So medyo the same lang sila ng

[01:08:00] So medyo the same lang sila ng requirements ano

[01:08:02] requirements ano it must also the bonds must be

[01:08:05] it must also the bonds must be registered with the SEC

[01:08:09] registered with the SEC power to deny preemptive right. This is

[01:08:11] power to deny preemptive right. This is found under section 38. All stockholders

[01:08:14] found under section 38. All stockholders of a stock corporation

[01:08:18] of a stock corporation shall enjoy preemptive right to

[01:08:20] shall enjoy preemptive right to subscribe to all issues or disposition

[01:08:24] subscribe to all issues or disposition of shares of any class in proportion to

[01:08:27] of shares of any class in proportion to their respective holdings unless such

[01:08:30] their respective holdings unless such right is denied by the articles or an

[01:08:33] right is denied by the articles or an amendment or two provided that such

[01:08:36] amendment or two provided that such preemptive right shall not extend to

[01:08:39] preemptive right shall not extend to shares issued in compliance with laws

[01:08:42] shares issued in compliance with laws requiring

[01:08:43] requiring stock offerings minimum stock owners by

[01:08:46] stock offerings minimum stock owners by the shares issued in good faith with the

[01:08:50] the shares issued in good faith with the approval of the stockholders

[01:08:53] approval of the stockholders 23d of the outstanding capital stock in

[01:08:57] 23d of the outstanding capital stock in exchange for property needed for

[01:08:59] exchange for property needed for corporate purposes or in payment of a

[01:09:02] corporate purposes or in payment of a previously contracted debt

[01:09:06] previously contracted debt what is the purpose underlying purpose

[01:09:08] what is the purpose underlying purpose of section 38

[01:09:12] of section 38 to um

[01:09:15] to um well the purpose or the or the

[01:09:17] well the purpose or the or the underlying basis of the preemptive right

[01:09:19] underlying basis of the preemptive right is to preserve two basic rights

[01:09:23] is to preserve two basic rights shareholders first political rights the

[01:09:26] shareholders first political rights the right to vote which includes control and

[01:09:29] right to vote which includes control and management of the corporation second

[01:09:33] management of the corporation second financial rights which includes the

[01:09:36] financial rights which includes the right to a share in the profits through

[01:09:39] right to a share in the profits through dividends may be in the form of cash,

[01:09:42] dividends may be in the form of cash, property or stock.

[01:09:45] property or stock. So in other words, this is the right to

[01:09:48] So in other words, this is the right to share in the residual assets after

[01:09:50] share in the residual assets after liquidation.

[01:09:54] Recall the general rule all stockholders

[01:09:57] Recall the general rule all stockholders of a stock corporation shall enjoy

[01:10:02] of a stock corporation shall enjoy preemptive right toscri all issues or

[01:10:06] preemptive right toscri all issues or disposition of shares of any class

[01:10:10] disposition of shares of any class in proportion to their respective

[01:10:13] in proportion to their respective shareholdings. So the the operative

[01:10:16] shareholdings. So the the operative clause is in proportion to the

[01:10:19] clause is in proportion to the respective shareholdings.

[01:10:22] respective shareholdings. So if your the percentage percentage of

[01:10:25] So if your the percentage percentage of your shareholdings now is only for

[01:10:27] your shareholdings now is only for example 10%

[01:10:30] example 10% okay can only buy as much as 10%

[01:10:35] okay can only buy as much as 10% right

[01:10:37] right not in excess of that okay so for

[01:10:39] not in excess of that okay so for example ang binebenta na dini-dispose na

[01:10:44] example ang binebenta na dini-dispose na shares of stock ng isang um shareholder

[01:10:47] shares of stock ng isang um shareholder is around 40%

[01:10:50] is around 40% okay you can only buy 10% per of that

[01:10:52] okay you can only buy 10% per of that amount the amount of that

[01:10:57] yun ang ibig sabihin

[01:11:00] yun ang ibig sabihin exceptions preemptive right is not

[01:11:03] exceptions preemptive right is not available in the following instances

[01:11:06] available in the following instances when such right is denied by the

[01:11:08] when such right is denied by the articles of incorporation

[01:11:10] articles of incorporation first second when shares are issued in

[01:11:15] first second when shares are issued in compliance with loss requiring stock

[01:11:17] compliance with loss requiring stock offerings or minimum stock ownership by

[01:11:20] offerings or minimum stock ownership by the public.

[01:11:23] the public. Okay. Anong ano yan attorney? Anyone

[01:11:26] Okay. Anong ano yan attorney? Anyone knows who's familiar with um

[01:11:29] knows who's familiar with um um

[01:11:33] IPOs initial public offerings?

[01:11:37] IPOs initial public offerings? So sa initial public offerings,

[01:11:40] So sa initial public offerings, okay um if nag-agree na yung company na

[01:11:44] okay um if nag-agree na yung company na they're going to enter into an IPO,

[01:11:47] they're going to enter into an IPO, okay understood na yan among all

[01:11:50] okay understood na yan among all stockholders na okay

[01:11:53] stockholders na okay importante to sa atin we need to get

[01:11:55] importante to sa atin we need to get funds from the public so we're going to

[01:11:58] funds from the public so we're going to offer pairs of stock

[01:12:01] offer pairs of stock understood na yun um napagdecided na yan

[01:12:05] understood na yun um napagdecided na yan ng board napagdecided ng stock holders

[01:12:07] ng board napagdecided ng stock holders na okay we have to do this we need

[01:12:10] na okay we have to do this we need financing

[01:12:12] financing okay

[01:12:14] okay stock exchange or entering into

[01:12:17] stock exchange or entering into participating in the stock exchange is a

[01:12:19] participating in the stock exchange is a form of corporate financing

[01:12:23] form of corporate financing Why?

[01:12:25] Why? You probably have a project or a plan

[01:12:29] You probably have a project or a plan and you need you're in need of money but

[01:12:31] and you need you're in need of money but you don't want to get loan from the

[01:12:33] you don't want to get loan from the back.

[01:12:35] back. So your option is your other option is

[01:12:38] So your option is your other option is you go through an IPO initial public

[01:12:41] you go through an IPO initial public offering. You get funds from the public

[01:12:44] offering. You get funds from the public you sell shares of stock.

[01:12:48] So magkakaroon na ng public ownership.

[01:12:50] So magkakaroon na ng public ownership. So that's why you have publicly listed

[01:12:53] So that's why you have publicly listed companies.

[01:12:57] Um

[01:13:00] minimum stock ownership. So there are

[01:13:02] minimum stock ownership. So there are certain

[01:13:05] certain uh industries that require minimum stock

[01:13:08] uh industries that require minimum stock ownership by the public.

[01:13:11] ownership by the public. So kung ganon kung ang issuance ng

[01:13:13] So kung ganon kung ang issuance ng shares is in compliance with a minimum

[01:13:16] shares is in compliance with a minimum stock ownership

[01:13:18] stock ownership rule uh then you cannot exercise a

[01:13:22] rule uh then you cannot exercise a preemptive right if you're a

[01:13:24] preemptive right if you're a stockholder.

[01:13:27] stockholder. Third, when shares are issued in good

[01:13:29] Third, when shares are issued in good faith with the approval of the

[01:13:31] faith with the approval of the stockholders representing 23d of the

[01:13:34] stockholders representing 23d of the outstanding capital stock,

[01:13:37] outstanding capital stock, take note in exchange for property

[01:13:40] take note in exchange for property needed for corporate purposes or in

[01:13:43] needed for corporate purposes or in payment of a previously contracted pet.

[01:13:48] payment of a previously contracted pet. So in such a case

[01:13:51] So in such a case you will be denied of your preemptive

[01:13:53] you will be denied of your preemptive right.

[01:13:55] right. Okay. So approved ng board 23ds ratified

[01:13:58] Okay. So approved ng board 23ds ratified ng stock holders and ang purpose niya is

[01:14:03] ng stock holders and ang purpose niya is it's for corporate expansion

[01:14:06] it's for corporate expansion or impayment of a previously contracted

[01:14:09] or impayment of a previously contracted them. So ano itong second circumstance

[01:14:12] them. So ano itong second circumstance na to? Again this is pursu to trust

[01:14:15] na to? Again this is pursu to trust funducted. Okay.

[01:14:25] Problem.

[01:14:30] Yeah.

[01:14:36] So check your chat box. Let me see your

[01:14:39] So check your chat box. Let me see your answers.

[01:15:37] Mm. Hag niyo na i-chat. Yes or ang sagot

[01:15:40] Mm. Hag niyo na i-chat. Yes or ang sagot lang? Yes or no? May the board do so.

[01:15:48] Ba okay. Oh yes.

[01:15:55] What is the rule sa preemptive right?

[01:15:59] What is the rule sa preemptive right? What is the rule?

[01:16:05] The general rule. All stockholders

[01:16:08] The general rule. All stockholders shall enjoy

[01:16:11] shall enjoy preemptive right. Ba yun ang general

[01:16:14] preemptive right. Ba yun ang general rule except yung mga situations na

[01:16:18] rule except yung mga situations na na-mention ko. Tatlo ba. First again

[01:16:21] na-mention ko. Tatlo ba. First again uulitin na natin ha. and it's denied by

[01:16:23] uulitin na natin ha. and it's denied by the articles. Second, issued in

[01:16:25] the articles. Second, issued in compliance with loss requiring minimum

[01:16:27] compliance with loss requiring minimum stock ownership or um stock offerings.

[01:16:31] stock ownership or um stock offerings. Third, third, if it's for a corporate

[01:16:35] Third, third, if it's for a corporate for corporate expansion or payment of a

[01:16:37] for corporate expansion or payment of a contracted debt

[01:16:40] contracted debt pero approved ng

[01:16:43] pero approved ng and

[01:16:46] and stockholders.

[01:16:49] Inapprove ba ng stock holders?

[01:16:53] Hindi.

[01:16:56] Hindi. Oh, hindi siya nag-comply sa exception

[01:17:01] Oh, hindi siya nag-comply sa exception ' ba? That means the answer is no. The

[01:17:06] ' ba? That means the answer is no. The poard cannot do so.

[01:17:08] poard cannot do so. It has to comply with the requirements

[01:17:12] It has to comply with the requirements of the law right on the law on the power

[01:17:18] of the law right on the law on the power to deny preemptive right. Kaya nga if

[01:17:21] to deny preemptive right. Kaya nga if you look at the wording of section 38

[01:17:23] you look at the wording of section 38 the wording is power to deny preemptive

[01:17:27] the wording is power to deny preemptive right because the rule is there is such

[01:17:31] right because the rule is there is such a thing as a preemptive right.

[01:17:33] a thing as a preemptive right. It is incumbent upon the corporation

[01:17:37] It is incumbent upon the corporation to follow

[01:17:41] the strictly no the requirements under

[01:17:44] the strictly no the requirements under section 38.

[01:17:47] section 38. So uh there will be a denial of the pre

[01:17:54] take note section 38 does not

[01:17:57] take note section 38 does not distinguish and states that stockholder

[01:18:00] distinguish and states that stockholder shall enjoy a preemptive right to

[01:18:03] shall enjoy a preemptive right to subscribe to all issues or disposition

[01:18:07] subscribe to all issues or disposition of shares of any class. Okay? It is

[01:18:11] of shares of any class. Okay? It is available to unissued or unsubscribed

[01:18:14] available to unissued or unsubscribed shares. So ibig sabihin mga new

[01:18:16] shares. So ibig sabihin mga new issuances

[01:18:18] issuances it's also um

[01:18:24] applicable to unissued shares as a

[01:18:27] applicable to unissued shares as a result of an increase in the authorized

[01:18:29] result of an increase in the authorized capital stock.

[01:18:32] capital stock. Okay.

[01:19:01] problem

[01:19:06] tayo ano ngayon

[01:19:10] tayo ano ngayon problem

[01:19:23] ngayon naman let's give it some twist

[01:19:26] ngayon naman let's give it some twist let's hear from some but don't worry it

[01:19:29] let's hear from some but don't worry it won

[01:19:31] won Okay.

[01:19:38] I open it up for volunteers

[01:19:41] I open it up for volunteers to recite

[01:19:44] to recite the straightforward answer and probably

[01:19:47] the straightforward answer and probably one sentence.

[01:20:47] Oh sige na. Walang volunteers.

[01:20:52] Grabe naman kayo.

[01:21:01] Volunteers. Salamat.

[01:21:07] Wala pa akong sumasagot sa chat.

[01:21:14] O

[01:21:16] O sige, I'll ask Mr. Calabia. Mr. Calabia,

[01:21:20] sige, I'll ask Mr. Calabia. Mr. Calabia, what do you think?

[01:21:26] Sige

[01:21:28] Sige you give me your best shot, Mr. Calabia.

[01:21:41] Ah good evening po. Masanay kayo sa

[01:21:43] Ah good evening po. Masanay kayo sa situational mga ganitong ganitong tanong

[01:21:46] situational mga ganitong ganitong tanong para masanay kayo paano sagutin.

[01:21:56] Ah my answer po attorney is yes po. Mr.

[01:22:00] Ah my answer po attorney is yes po. Mr. He has a a preemptive right to subscribe

[01:22:03] He has a a preemptive right to subscribe to a proportionate portion of the

[01:22:05] to a proportionate portion of the remaining 10,000 shares and he must

[01:22:07] remaining 10,000 shares and he must exercise this right within the period

[01:22:10] exercise this right within the period fixed by the board of directors or in

[01:22:12] fixed by the board of directors or in its absence within a reasonable time po.

[01:22:15] its absence within a reasonable time po. >> Okay, correct. Very good.

[01:22:19] >> Okay, correct. Very good. Thank you, Mr. Calabia.

[01:22:29] To take note this right is

[01:22:33] To take note this right is um cannot you know cannot just simply be

[01:22:36] um cannot you know cannot just simply be cannot simply be waved okay a

[01:22:38] cannot simply be waved okay a stockholder

[01:22:40] stockholder who neither desires nor intends to buy

[01:22:44] who neither desires nor intends to buy any of the stocks being offered.

[01:22:47] any of the stocks being offered. Okay,

[01:22:49] Okay, I'm sorry. What did Okay. So since this

[01:22:51] I'm sorry. What did Okay. So since this is a personal right, it's wavable. Okay.

[01:22:56] is a personal right, it's wavable. Okay. That means a stockholder who does not

[01:22:59] That means a stockholder who does not who decides to forgo

[01:23:04] who decides to forgo uh his or her preemptive rights. Okay.

[01:23:07] uh his or her preemptive rights. Okay. Then obviously he may wave such right in

[01:23:10] Then obviously he may wave such right in which event the shares may be offered to

[01:23:13] which event the shares may be offered to any interest

[01:23:16] any interest acceptable to the corporation.

[01:23:21] The right to subscribe to new issues and

[01:23:23] The right to subscribe to new issues and disposition may be transferred by the

[01:23:26] disposition may be transferred by the shareholder.

[01:23:29] Unless there is an express restriction

[01:23:31] Unless there is an express restriction in the articles of incorporation, the

[01:23:34] in the articles of incorporation, the preemptive right is transferable.

[01:23:40] And any questions with respect to

[01:23:42] And any questions with respect to preemptive right? Medyo nage-gets na

[01:23:44] preemptive right? Medyo nage-gets na yung concept niya. So tandaan niyo lang

[01:23:47] yung concept niya. So tandaan niyo lang if stockholder ka na ng corporation

[01:23:51] at pag mag-i-issue ng panibagong shares

[01:23:54] at pag mag-i-issue ng panibagong shares ibig sabihin

[01:23:57] ibig sabihin primary market. Okay? Ito yung mga mga

[01:23:59] primary market. Okay? Ito yung mga mga terms na to ng sa investment terms na

[01:24:01] terms na to ng sa investment terms na to. Primary market and secondary market.

[01:24:06] to. Primary market and secondary market. Secondary market yan yung tine-trade na

[01:24:09] Secondary market yan yung tine-trade na sa stock exchange. Okay.

[01:24:13] sa stock exchange. Okay. Primary market ito yung hindi pa

[01:24:16] Primary market ito yung hindi pa nai-issue

[01:24:18] nai-issue ng corporation.

[01:24:20] ng corporation. Bakit na siguro nagtataka kayo? Bakit?

[01:24:23] Bakit na siguro nagtataka kayo? Bakit? Ano pa yung hindi nai-issue? Possible

[01:24:25] Ano pa yung hindi nai-issue? Possible kasi na kunyari ang nakalagay ng

[01:24:28] kasi na kunyari ang nakalagay ng authorized capital stock mo sa articles

[01:24:30] authorized capital stock mo sa articles mo is for example 1 million.

[01:24:32] mo is for example 1 million. At ang nag-subscribe lang dito, ibig

[01:24:34] At ang nag-subscribe lang dito, ibig sabihin, subscribe and paid yung yung

[01:24:38] sabihin, subscribe and paid yung yung yung talagang may capital is around half

[01:24:41] yung talagang may capital is around half of it. So for example, 500,000. So ibig

[01:24:44] of it. So for example, 500,000. So ibig sabihin may 500,000 pa na pwedeng ipasok

[01:24:49] sabihin may 500,000 pa na pwedeng ipasok sa corporation ' ba? Kasi yun ang

[01:24:52] sa corporation ' ba? Kasi yun ang authorized ka eh. 'Di ba? 'Yun 'yung

[01:24:55] authorized ka eh. 'Di ba? 'Yun 'yung authorized ka ng SEC.

[01:24:58] authorized ka ng SEC. Pwede mong pwede kang as much as Php

[01:25:01] Pwede mong pwede kang as much as Php million

[01:25:04] million ba but for some reason

[01:25:08] ba but for some reason yung capital lang na pumasok sayo mga

[01:25:10] yung capital lang na pumasok sayo mga investors mga incorporators 500 lang

[01:25:13] investors mga incorporators 500 lang yung pera eh hanggang doun ka lang okay

[01:25:17] yung pera eh hanggang doun ka lang okay para para makapag conduct ka ng business

[01:25:20] para para makapag conduct ka ng business mo. But meron ka pang addition pwede ka

[01:25:24] mo. But meron ka pang addition pwede ka pang tumaas hanggang 1 million. So yun

[01:25:27] pang tumaas hanggang 1 million. So yun panibagong shares of stock yun issue

[01:25:30] panibagong shares of stock yun issue ones. Now for the existing shareholders,

[01:25:35] ones. Now for the existing shareholders, stockholders

[01:25:37] stockholders you want to preserve

[01:25:40] you want to preserve as much as possible. You want to

[01:25:42] as much as possible. You want to preserve your control

[01:25:46] preserve your control over the corporation.

[01:25:48] over the corporation. Yun yung kagandahan ng preemptive right

[01:25:52] Yun yung kagandahan ng preemptive right kasi for example

[01:25:54] kasi for example ba ako tayo this entire class we are

[01:25:59] ba ako tayo this entire class we are stockholders of a corporation all of us

[01:26:02] stockholders of a corporation all of us pay equally equal shares tapos

[01:26:05] pay equally equal shares tapos mag-i-issue tayo ng panibagong shares

[01:26:08] mag-i-issue tayo ng panibagong shares 'di ba issue tayo ng panibagong shares

[01:26:13] 'di ba issue tayo ng panibagong shares kasi kailangan natin ng pera ngayon

[01:26:16] kasi kailangan natin ng pera ngayon assuming na Si kunyari si Mr. Nasional

[01:26:20] assuming na Si kunyari si Mr. Nasional ay 'yung pinakamayaman sa ating lahat at

[01:26:24] ay 'yung pinakamayaman sa ating lahat at gusto niyang i-subscribe

[01:26:27] gusto niyang i-subscribe yung remaining 500,000.

[01:26:32] Kaya ba niyang i-subscribe yung buong

[01:26:34] Kaya ba niyang i-subscribe yung buong 500,000?

[01:26:38] Ano ang ano ang ano ang nakalagay sa

[01:26:40] Ano ang ano ang ano ang nakalagay sa code?

[01:26:43] code? In

[01:26:45] In proportion only. So remember equal ' ba

[01:26:49] proportion only. So remember equal ' ba equal tayo. So hindi niya makukuha yung

[01:26:51] equal tayo. So hindi niya makukuha yung buong 500,000 kahit na napakadami ng

[01:26:55] buong 500,000 kahit na napakadami ng pera ' ba

[01:26:59] pera ' ba kasi hanggang doun ka lang eh.

[01:27:02] kasi hanggang doun ka lang eh. Yun naman ang kagandahan ng preemptive

[01:27:04] Yun naman ang kagandahan ng preemptive right ' ba?

[01:27:08] right ' ba? Yun ang kagandahan ng preemptive right.

[01:27:10] Yun ang kagandahan ng preemptive right. Hindi totoo ang nasa drama attorney.

[01:27:12] Hindi totoo ang nasa drama attorney. Bakit? Ano ang nasa drama ni Pedro?

[01:27:16] Bakit? Ano ang nasa drama ni Pedro? Hindi ko po alam yun ma'am.

[01:27:20] Hindi ko po alam yun ma'am. No attorne sometimes you see in dramas

[01:27:23] No attorne sometimes you see in dramas all of a sudden transfer na lahat ng

[01:27:25] all of a sudden transfer na lahat ng >> ah yes yes

[01:27:28] >> ah yes yes because if you're existing stockholder

[01:27:33] because if you're existing stockholder okay you're only allowed to okay

[01:27:37] okay you're only allowed to okay exercise a preemptive right but you're

[01:27:39] exercise a preemptive right but you're only allowed to buy to a certain amount

[01:27:42] only allowed to buy to a certain amount lang for example assuming ha ilan tayo

[01:27:45] lang for example assuming ha ilan tayo 40 so mr national is equally divided 'di

[01:27:49] 40 so mr national is equally divided 'di ba? So one out one 1 over 40 lang 'di

[01:27:54] ba? So one out one 1 over 40 lang 'di ba? Ganun lang ang kaya niyang pwede

[01:27:58] ba? Ganun lang ang kaya niyang pwede niyang bilhin kahit na

[01:28:01] niyang bilhin kahit na napakadami niyang datong 'di ba Mr.

[01:28:04] napakadami niyang datong 'di ba Mr. national.

[01:28:07] So

[01:28:09] So um

[01:28:12] in a way um in certain in other

[01:28:15] in a way um in certain in other instances it's also a mechanism wherein

[01:28:20] instances it's also a mechanism wherein stockholders

[01:28:21] stockholders retain control of their corporation of

[01:28:24] retain control of their corporation of of the corporations for example um

[01:28:29] of the corporations for example um 20 tig to 20% ng lima ba and they want

[01:28:33] 20 tig to 20% ng lima ba and they want to make sure that um while they offer

[01:28:36] to make sure that um while they offer new issuances they want to make sure na

[01:28:39] new issuances they want to make sure na for example um okay

[01:28:42] for example um okay I'm sorry so ganitong example so for

[01:28:44] I'm sorry so ganitong example so for example 60 um 60% of a corporation is

[01:28:48] example 60 um 60% of a corporation is owned by um one corporation and then the

[01:28:51] owned by um one corporation and then the rest is parang separate individuals na

[01:28:55] rest is parang separate individuals na so if in the event the corporation uh

[01:28:59] so if in the event the corporation uh for example um issues new shares of

[01:29:02] for example um issues new shares of stock okay so ibig sabihin Yan kuha na

[01:29:05] stock okay so ibig sabihin Yan kuha na sila ng bagong finanse. May bagong pera

[01:29:07] sila ng bagong finanse. May bagong pera papasok ' ba.

[01:29:10] papasok ' ba. Si Major si ah yung yung 60% owner can

[01:29:16] Si Major si ah yung yung 60% owner can only buy up to 60%. So in effect he

[01:29:19] only buy up to 60%. So in effect he retains that 60%

[01:29:21] retains that 60% 'di ba? He retains that 60% ownership of

[01:29:24] 'di ba? He retains that 60% ownership of the corporation.

[01:29:27] the corporation. So

[01:29:28] So hindi siya na-dilute

[01:29:31] hindi siya na-dilute ibig sabihin non, ibig sabihin non yung

[01:29:34] ibig sabihin non, ibig sabihin non yung control niya sa corporation remains the

[01:29:38] control niya sa corporation remains the same.

[01:29:41] same. So kahit na mag-issue at mag-issue ka ng

[01:29:43] So kahit na mag-issue at mag-issue ka ng panibagong

[01:29:45] panibagong of stock,

[01:29:47] of stock, ganun pa rin yung control

[01:29:51] ganun pa rin yung control ng 60%

[01:29:53] ng 60% majority owner. Hindi magbabago as long

[01:29:56] majority owner. Hindi magbabago as long as exercises the ba. So ibig sabihin

[01:30:00] as exercises the ba. So ibig sabihin hindi siya mada-dilute kasi for example

[01:30:02] hindi siya mada-dilute kasi for example okay 60% owner ka pero pwede naman kasi

[01:30:05] okay 60% owner ka pero pwede naman kasi yung board of ba investor ka lang eh

[01:30:08] yung board of ba investor ka lang eh hindi ka you don't you don't umle with

[01:30:12] hindi ka you don't you don't umle with the with the operations of the business

[01:30:14] the with the operations of the business right so you leave it to management so

[01:30:16] right so you leave it to management so you just investor right but um in a way

[01:30:21] you just investor right but um in a way since you own 60% of the business may

[01:30:24] since you own 60% of the business may influence ka pa rin kung sinong boboto

[01:30:26] influence ka pa rin kung sinong boboto sa board so Um you want to retain that

[01:30:32] sa board so Um you want to retain that control and influence over the

[01:30:34] control and influence over the corporation. Okay? So what you do, you

[01:30:37] corporation. Okay? So what you do, you exercise preid right para yung 60% ka pa

[01:30:40] exercise preid right para yung 60% ka pa rin hindi ka mada-dilute.

[01:30:43] rin hindi ka mada-dilute. Nangyayari kasi yan na biglang merong

[01:30:46] Nangyayari kasi yan na biglang merong for example ah investor

[01:30:50] for example ah investor na malaki lalapit.

[01:30:53] na malaki lalapit. Hoy Mr. Ano? Mr. X may pera ako. Gusto

[01:30:57] Hoy Mr. Ano? Mr. X may pera ako. Gusto ko bilhin business mo.

[01:31:00] ko bilhin business mo. Okay. I have for example Php1 billion

[01:31:05] Okay. I have for example Php1 billion going to buy your business.

[01:31:08] going to buy your business. Okay. Papasok siya ngayon. Okay. Hindi

[01:31:12] Okay. Papasok siya ngayon. Okay. Hindi alam ng mga ibang ibang stockholders

[01:31:14] alam ng mga ibang ibang stockholders ba hindi nila alam yan. Okay.

[01:31:18] ba hindi nila alam yan. Okay. Ngayon all of a sudden biglang nagkaroon

[01:31:20] Ngayon all of a sudden biglang nagkaroon na ng kontrata ah.

[01:31:23] na ng kontrata ah. Nagkakaroon na ng stock purchase

[01:31:24] Nagkakaroon na ng stock purchase agreement ah. Nagkakaroon na ng mga

[01:31:26] agreement ah. Nagkakaroon na ng mga ganitong meetings.

[01:31:29] ganitong meetings. Okay? Tapos um tinatrabaho na ng board

[01:31:32] Okay? Tapos um tinatrabaho na ng board tapos mag in-approve na ng board. Pero

[01:31:35] tapos mag in-approve na ng board. Pero syempre a-approve pa ng stock holders ba

[01:31:38] syempre a-approve pa ng stock holders ba a-approve mo na ng stock holders if

[01:31:40] a-approve mo na ng stock holders if magkakaroon ng um

[01:31:45] papaalam nila if merong gustong mag

[01:31:48] papaalam nila if merong gustong mag invest sa corporation ba because it will

[01:31:50] invest sa corporation ba because it will necessarily dilute them. Now

[01:31:55] necessarily dilute them. Now once that notice the shareholders are

[01:31:57] once that notice the shareholders are sent

[01:31:59] sent they can now exercise

[01:32:01] they can now exercise the the empty drie.

[01:32:03] the the empty drie. Okay. Pwede na nilang for example, okay

[01:32:07] Okay. Pwede na nilang for example, okay teka, may 1 billion na papasok pero teka

[01:32:11] teka, may 1 billion na papasok pero teka tatap tatapatan ko yan. Okay? Para

[01:32:14] tatap tatapatan ko yan. Okay? Para ma-retain ko yung

[01:32:16] ma-retain ko yung ah control and yung percentage cost

[01:32:19] ah control and yung percentage cost corporation. That's possible. That's the

[01:32:22] corporation. That's possible. That's the preference given to the existing stock.

[01:32:27] preference given to the existing stock. Okay. So I hope you you understand now

[01:32:31] Okay. So I hope you you understand now the purpose and uh um uh terminology and

[01:32:37] the purpose and uh um uh terminology and as well as the the conditionalities

[01:32:39] as well as the the conditionalities behind uh the preempty thread.

[01:32:44] How similar is this with the right of

[01:32:46] How similar is this with the right of first refusal? Kaiba siya. Okay.

[01:32:51] first refusal? Kaiba siya. Okay. The general rule is that corporate

[01:32:54] The general rule is that corporate chairs are freely transferable and does

[01:32:56] chairs are freely transferable and does not need the consent of other

[01:32:58] not need the consent of other stockholders. Exception the articles of

[01:33:01] stockholders. Exception the articles of incorporation may provide a right of

[01:33:04] incorporation may provide a right of first refusal to stockholders

[01:33:07] first refusal to stockholders as a limitation on transfer.

[01:33:11] as a limitation on transfer. For example, the articles of

[01:33:13] For example, the articles of incorporation may provide that any

[01:33:15] incorporation may provide that any stockholder

[01:33:17] stockholder who intends to sell his or her share

[01:33:20] who intends to sell his or her share must first offer the same to the other

[01:33:24] must first offer the same to the other stockholders who are given a period of

[01:33:26] stockholders who are given a period of time to purchase the share. The right of

[01:33:29] time to purchase the share. The right of first refusal may also be based purely

[01:33:32] first refusal may also be based purely on contract.

[01:33:36] So

[01:33:38] So o ngayon na magkaiba na siya ba. So weve

[01:33:41] o ngayon na magkaiba na siya ba. So weve going to explain this ha. Yung

[01:33:43] going to explain this ha. Yung preemptive right that is for unissued

[01:33:46] preemptive right that is for unissued shares.

[01:33:48] shares. Na-mention ko kanina primary market

[01:33:51] Na-mention ko kanina primary market ba ilalabas mo pa lang sa public mag-ipo

[01:33:56] ba ilalabas mo pa lang sa public mag-ipo ka ng additional shares or may biglang

[01:34:00] ka ng additional shares or may biglang may biglang investor na gustong pumasok

[01:34:03] may biglang investor na gustong pumasok tapos meron ka pang authorized capital

[01:34:06] tapos meron ka pang authorized capital stock. So sakto pwede may issued chest

[01:34:09] stock. So sakto pwede may issued chest mag-i-issue ka ng panibago.

[01:34:13] mag-i-issue ka ng panibago. Diyan papasok preemptive right. Ngayon

[01:34:16] Diyan papasok preemptive right. Ngayon if existing na na ibig sabihin naissue

[01:34:19] if existing na na ibig sabihin naissue na 'yung shares.

[01:34:23] Naissue na yung shares

[01:34:27] um

[01:34:29] um ikaw as a shareholder the question is

[01:34:32] ikaw as a shareholder the question is what's the general rule? The general

[01:34:34] what's the general rule? The general rule is that you're free to as you know

[01:34:37] rule is that you're free to as you know as a property holder of that share

[01:34:39] as a property holder of that share you're free to sell it to anyone. You

[01:34:41] you're free to sell it to anyone. You can do anything with it ' ba property

[01:34:44] can do anything with it ' ba property rights ba the law on property. You're

[01:34:46] rights ba the law on property. You're free to do whatever it whatever you want

[01:34:48] free to do whatever it whatever you want with it.

[01:34:54] limited

[01:34:57] limited if in the articles of incorporation

[01:35:02] if in the articles of incorporation the right of first refusal is granted to

[01:35:05] the right of first refusal is granted to other shareholders.

[01:35:10] Okay. Naintindihanyo ba yung right of

[01:35:14] Okay. Naintindihanyo ba yung right of first refusal?

[01:35:17] first refusal? Um

[01:35:19] Um I suppose all of you guys have taken up

[01:35:21] I suppose all of you guys have taken up oblicon here. But to those who have not

[01:35:25] oblicon here. But to those who have not taken Oblicon, it's basically a right

[01:35:28] taken Oblicon, it's basically a right granted

[01:35:30] granted purely based on contract.

[01:35:33] purely based on contract. Contractual talaga iyan. Okay?

[01:35:36] Contractual talaga iyan. Okay? Contractual talaga yan. for example

[01:35:39] Contractual talaga yan. for example and you have to respect the right of

[01:35:41] and you have to respect the right of first refusal because the contract

[01:35:44] first refusal because the contract between the parties serves as the law

[01:35:47] between the parties serves as the law between the parties. Okay? So you have

[01:35:51] between the parties. Okay? So you have to abide by the terms and conditions of

[01:35:53] to abide by the terms and conditions of the contract.

[01:35:55] the contract. So for example bago ibig sabihin in

[01:35:58] So for example bago ibig sabihin in short no bago mo ibenta yan sa iba,

[01:36:01] short no bago mo ibenta yan sa iba, i-notify mo ako. I-offer mo muna sa

[01:36:04] i-notify mo ako. I-offer mo muna sa akin.

[01:36:06] akin. Okay? In other words, no? Put it to put

[01:36:08] Okay? In other words, no? Put it to put it simply offer mo muna sa kakontrata mo

[01:36:13] it simply offer mo muna sa kakontrata mo bago mo i-offer sa iba. Ngayon, if

[01:36:17] bago mo i-offer sa iba. Ngayon, if inoffer mo sa iba

[01:36:20] inoffer mo sa iba ng mas mababa

[01:36:25] tapos yung offer mo sa akin ay mas

[01:36:27] tapos yung offer mo sa akin ay mas mataas pala, you violated the right of

[01:36:31] mataas pala, you violated the right of first refusal.

[01:36:35] remember. So

[01:36:38] remember. So kailangan anong rule do? Kailangan

[01:36:40] kailangan anong rule do? Kailangan i-offer mo ulit sa akin ng mas mababa.

[01:36:44] i-offer mo ulit sa akin ng mas mababa. Kung ano yung offer mo sa public o sa

[01:36:47] Kung ano yung offer mo sa public o sa third sa sa iba yun ang ioo yung same

[01:36:50] third sa sa iba yun ang ioo yung same amount. That's what you're going to

[01:36:52] amount. That's what you're going to offer to me.

[01:36:55] offer to me. Okay? So yan ang essence ng right to

[01:36:57] Okay? So yan ang essence ng right to first it with respect to corporations

[01:37:01] first it with respect to corporations however.

[01:37:03] however. It's not just simply

[01:37:07] It's not just simply um it must so the rule is that it must

[01:37:10] um it must so the rule is that it must be

[01:37:11] be included in the articles of

[01:37:14] included in the articles of incorporation.

[01:37:16] incorporation. Okay.

[01:37:18] Okay. So that's the requirement

[01:37:21] So that's the requirement and normally

[01:37:24] and normally ang practice niyan. So um it's um if

[01:37:29] ang practice niyan. So um it's um if there is a specific provision on the

[01:37:30] there is a specific provision on the right of first refusal in the articles

[01:37:34] right of first refusal in the articles yung corporate secretary the one who is

[01:37:36] yung corporate secretary the one who is issuing the shares will also include in

[01:37:38] issuing the shares will also include in the recital of the certificate of shares

[01:37:41] the recital of the certificate of shares of stock a provision. on

[01:37:45] of stock a provision. on on the right of first refus

[01:37:48] on the right of first refus meron ding polatilya diyan

[01:37:51] meron ding polatilya diyan minsan may nakalagay yan subject to the

[01:37:54] minsan may nakalagay yan subject to the provisions in the bylaw section

[01:37:58] provisions in the bylaw section xx in the by of ganyan ganyan um

[01:38:02] xx in the by of ganyan ganyan um granting the

[01:38:05] granting the uh stockholders the right of first

[01:38:09] uh stockholders the right of first minsan lumalabas yan sa certificate of

[01:38:12] minsan lumalabas yan sa certificate of shares of

[01:38:15] Okay. So if you're the buyer, you will

[01:38:20] Okay. So if you're the buyer, you will be notified. Uy, meron palang right to

[01:38:24] be notified. Uy, meron palang right to first refusal. Baka magkaproblema ako

[01:38:26] first refusal. Baka magkaproblema ako nito

[01:38:28] nito later on. Okay. So yung pinagkaiba ng

[01:38:31] later on. Okay. So yung pinagkaiba ng right of refusal sa preemptive right.

[01:38:35] right of refusal sa preemptive right. Okay. Preemptive right for unissued

[01:38:38] Okay. Preemptive right for unissued shares. Right to first refusal for

[01:38:40] shares. Right to first refusal for issued shares.

[01:38:46] But take note the right ofusal is not

[01:38:50] But take note the right ofusal is not statutory right. Okay. It's essentially

[01:38:53] statutory right. Okay. It's essentially contractual right lang. So statutory

[01:38:57] contractual right lang. So statutory right meaning it's found under the law.

[01:39:01] right meaning it's found under the law. Section 38 provides for the preemptive

[01:39:03] Section 38 provides for the preemptive right

[01:39:06] right not found in the corporation

[01:39:09] not found in the corporation simply out of contract.

[01:39:15] Section 39, sale or other disposition of

[01:39:18] Section 39, sale or other disposition of assets. Um, that'sal provision.

[01:39:22] assets. Um, that'sal provision. So, I'll just leave it up to you.

[01:39:33] I just I I would just like to highlight

[01:39:35] I just I I would just like to highlight no this provision in relation to the

[01:39:39] no this provision in relation to the Philippine Competition app.

[01:39:41] Philippine Competition app. or Republic Act 10667

[01:39:44] or Republic Act 10667 because under section 20 of the

[01:39:46] because under section 20 of the Philippine Competition act it provides

[01:39:50] Philippine Competition act it provides for uh

[01:39:53] for uh prohibition on certain mergers and

[01:39:55] prohibition on certain mergers and acquisitions

[01:39:58] acquisitions a merger or acquisition

[01:40:00] a merger or acquisition that substantially prevents, restricts

[01:40:04] that substantially prevents, restricts or lessen competition in the relevant

[01:40:07] or lessen competition in the relevant market or in the market for goods or

[01:40:09] market or in the market for goods or services.

[01:40:10] services. as may be determined by the commission

[01:40:13] as may be determined by the commission shall be prohibited.

[01:40:16] shall be prohibited. Okay, that's the power of the PCC. So in

[01:40:19] Okay, that's the power of the PCC. So in cases of mergers and acquisitions,

[01:40:22] cases of mergers and acquisitions, before kasi kung wala pa yung Philippine

[01:40:25] before kasi kung wala pa yung Philippine Competition Act, approval lang ni SEC,

[01:40:28] Competition Act, approval lang ni SEC, okay ka na. If you're a publicly listed

[01:40:30] okay ka na. If you're a publicly listed company, approval lang ni PSE,

[01:40:32] company, approval lang ni PSE, Philippine stock change, you're good to

[01:40:35] Philippine stock change, you're good to go. But now with the Philippine

[01:40:37] go. But now with the Philippine Competition Actly

[01:40:41] with the competition laws

[01:40:45] with the competition laws to ensure that you will not have that to

[01:40:48] to ensure that you will not have that to ensure that your merger is will not be

[01:40:52] ensure that your merger is will not be declared

[01:40:54] declared by the PCC.

[01:41:07] So on sale or other disposition of

[01:41:09] So on sale or other disposition of assets the general rule corporation may

[01:41:11] assets the general rule corporation may by a majority vote of its board of

[01:41:13] by a majority vote of its board of directors or trustes sell lease exchange

[01:41:16] directors or trustes sell lease exchange mortgage pledge or otherwise dispose of

[01:41:19] mortgage pledge or otherwise dispose of its property and assets

[01:41:22] its property and assets except

[01:41:24] except the sale of all or substantially all of

[01:41:26] the sale of all or substantially all of the corporation's properties and assets

[01:41:30] the corporation's properties and assets in which case in which case

[01:41:33] in which case in which case there must be 23d

[01:41:37] there must be 23d uh uh um affirmative vote on the part of

[01:41:42] uh uh um affirmative vote on the part of the stockholders.

[01:41:44] the stockholders. Okay? So kapag sale of all or

[01:41:47] Okay? So kapag sale of all or substantially all, bakit? It's a

[01:41:50] substantially all, bakit? It's a fundamental transaction already. It will

[01:41:53] fundamental transaction already. It will affect the stock.

[01:41:56] affect the stock. So ganon you have to inform the stock

[01:41:59] So ganon you have to inform the stock folders.

[01:42:08] The determination of whether or not the

[01:42:10] The determination of whether or not the sale involves all or substantially all

[01:42:12] sale involves all or substantially all of the corporation properties and assets

[01:42:14] of the corporation properties and assets must be computed based on its net asset

[01:42:17] must be computed based on its net asset value as shown in its latest financial

[01:42:21] value as shown in its latest financial statements.

[01:42:23] statements. A sale or other disposition shall be

[01:42:25] A sale or other disposition shall be deemed to cover substantially all the

[01:42:27] deemed to cover substantially all the corporate property and assets if the

[01:42:31] corporate property and assets if the corporation would be rendered incapable.

[01:42:34] corporation would be rendered incapable. ofuing the business or accomplishing the

[01:42:37] ofuing the business or accomplishing the purpose for which it was incorporated.

[01:42:48] Take note after approval by the

[01:42:51] Take note after approval by the stockholders or members the board of

[01:42:53] stockholders or members the board of directors or trustes may nevertheless in

[01:42:56] directors or trustes may nevertheless in its discretion abandon such sale

[01:43:00] its discretion abandon such sale exchange or other disposition of

[01:43:02] exchange or other disposition of property and assets subject to the

[01:43:05] property and assets subject to the rights of third parties under any

[01:43:07] rights of third parties under any contract relating their two without

[01:43:09] contract relating their two without further action or approval by the

[01:43:11] further action or approval by the stockholders or members.

[01:43:21] The effect on creditors is that the sale

[01:43:25] The effect on creditors is that the sale of all or substantially all of the

[01:43:27] of all or substantially all of the assets of the transfer corporation will

[01:43:32] assets of the transfer corporation will not be liable for the the transfer

[01:43:35] not be liable for the the transfer corporation will not be liable for the

[01:43:37] corporation will not be liable for the debts of the transferor corporation.

[01:43:41] debts of the transferor corporation. Ibig sabihin yung nabenta so yung bibili

[01:43:45] Ibig sabihin yung nabenta so yung bibili bibili ng um assets ng panibagong nung

[01:43:50] bibili ng um assets ng panibagong nung corporation

[01:43:52] corporation hindi uh the corporation will not be

[01:43:54] hindi uh the corporation will not be liable for for the for um the deaths of

[01:43:58] liable for for the for um the deaths of the prior of the transfer corporation

[01:44:03] except in the case of the nell doctrine.

[01:44:06] except in the case of the nell doctrine. Okay.

[01:44:08] Okay. So what is the nil doctrine? No, it's

[01:44:10] So what is the nil doctrine? No, it's it's a Supreme Court ruling. Okay.

[01:44:12] it's a Supreme Court ruling. Okay. Wherein the transfer corporation may be

[01:44:15] Wherein the transfer corporation may be held the transfer corporation may be

[01:44:18] held the transfer corporation may be held accountable for debts of the

[01:44:20] held accountable for debts of the transfer or corporation if there is an

[01:44:25] transfer or corporation if there is an assumption express or implied assumption

[01:44:28] assumption express or implied assumption of liabilities.

[01:44:30] of liabilities. Second, the transaction amounts

[01:44:32] Second, the transaction amounts consolidation or merger. Third, the

[01:44:36] consolidation or merger. Third, the transaction is entered into fraudulently

[01:44:38] transaction is entered into fraudulently to escape liability from debtors or or

[01:44:41] to escape liability from debtors or or purchase was in fraud of creditors

[01:44:45] purchase was in fraud of creditors and the purchaser becomes a continuation

[01:44:49] and the purchaser becomes a continuation of seller.

[01:44:51] of seller. That's the nell document.

[01:45:01] So there are cases no assigned but um I

[01:45:05] So there are cases no assigned but um I don't think we are able to

[01:45:08] don't think we are able to go through all of them. We just continue

[01:45:13] go through all of them. We just continue with those cases our next meeting

[01:45:17] with those cases our next meeting are

[01:45:21] five cases lang naman iyan. And then we

[01:45:24] five cases lang naman iyan. And then we proceed with the seventh week.

[01:45:28] Powers of Corporation. So

[01:45:31] Powers of Corporation. So that's it for today. Are there any

[01:45:33] that's it for today. Are there any questions?

[01:45:36] questions? >> No questions, attorney. Thank you po.

[01:45:38] >> No questions, attorney. Thank you po. >> Thank you. Um so I understand we have

[01:45:42] >> Thank you. Um so I understand we have two more meetings. So we won't be

[01:45:44] two more meetings. So we won't be meeting this Saturday.

[01:45:48] meeting this Saturday. Um I know this coming Saturday but I'll

[01:45:52] Um I know this coming Saturday but I'll be needing um two at least two meetings

[01:45:56] be needing um two at least two meetings coming from uh for our class before we

[01:46:00] coming from uh for our class before we um before we um

[01:46:04] um before we um before you prepare for your meeters.

[01:46:06] before you prepare for your meeters. Okay.

[01:46:09] Okay. All right. Just let me know. Siguro Mr.

[01:46:11] All right. Just let me know. Siguro Mr. Brage, just update me kung kailan yung I

[01:46:14] Brage, just update me kung kailan yung I think there's one makeup class, right?

[01:46:16] think there's one makeup class, right? So just update me.

[01:46:18] So just update me. Happy po. Sige po. All right. So that's

[01:46:21] Happy po. Sige po. All right. So that's it for today. Thank you very much and

[01:46:23] it for today. Thank you very much and have a good life.

[01:46:24] have a good life. >> Thank you po. Thank you po Attney.

#8 | Corp and Basic Sec Law | Title IV: Power of the Corporations | Section 35-38 (March 28, 2026)

https://www.youtube.com/watch?v=JOeVLhhgGJc

Summary

TL;DR — This lecture delves into the various powers of a corporation, focusing on Sections 35-38 of the Revised Corporation Code. It clarifies that while the board of directors exercises corporate powers, certain fundamental changes and actions require stockholder approval. The discussion also covers the nuances of corporate officers' authority, the conditions under which corporations can enter partnerships or joint ventures, and the limitations on their implied and incidental powers.

Key points

• Corporate powers are primarily exercised by the board of directors, but fundamental changes like increasing debt or stock require stockholder consent.

• Corporations can engage in partnerships or joint ventures under specific conditions, with SEC rulings providing guidance on these exceptions.

• Implied and incidental powers are recognized, but they must be essential or necessary for carrying out the corporation's stated purposes, as illustrated by SEC opinions on manufacturing vs. selling businesses.

• The sale or disposal of corporate assets, especially all or substantially all of them, requires significant stockholder approval (2/3 vote) and is subject to competition laws.

• Preemptive rights allow existing stockholders to maintain their proportional ownership when new shares are issued, preserving their control and financial stake.

• The trust fund doctrine is crucial, particularly concerning decreases in capital stock, ensuring that creditors' rights are protected and corporate assets are not unduly depleted.

Takeaway — Understanding the scope and limitations of corporate powers, including the necessity of stockholder approval for fundamental actions and the protection of creditor rights, is essential for proper corporate governance and compliance.

摘要 / Summary (en)

Özet — Bu ders, Kurumsal Kanun'un 35-38. Bölümlerine odaklanarak bir şirketin çeşitli yetkilerini ele almaktadır. Yönetim kurulunun kurumsal güçleri kullanmasına rağmen, belirli temel değişiklikler ve eylemler için hissedar onayının gerektiğini açıklamaktadır. Tartışma ayrıca kurumsal görevlilerin yetkisinin inceliklerini, şirketlerin ortaklık veya ortak girişimlere girebileceği koşulları ve ima edilen ve tesadüfi yetkilerinin sınırlamalarını da kapsamaktadır.

Ana Noktalar

• Kurumsal güçler öncelikle yönetim kurulu tarafından kullanılır, ancak borcun veya hisse senedinin artırılması gibi temel değişiklikler için hissedar onayı gerekir.

• Şirketler, belirli koşullar altında ortaklıklar veya ortak girişimler yapabilirler; SEC kararları bu istisnalar hakkında rehberlik sağlar.

• İma edilen ve tesadüfi güçler tanınır, ancak bunların şirketin belirtilen amaçlarını yerine getirmesi için gerekli veya zorunlu olması gerekir; bu, üretim ve satış işletmeleri hakkındaki SEC görüşleriyle örneklendirilmiştir.

• Kurumsal varlıkların satışı veya elden çıkarılması, özellikle de tamamının veya büyük bir kısmının satışı, önemli hissedar onayı (2/3 oy) gerektirir ve rekabet yasalarına tabidir.

• Öncelikli haklar, mevcut hissedarların yeni hisse senedi ihraç edildiğinde orantılı sahipliklerini korumalarına olanak tanıyarak kontrol ve finansal paylarını korur.

• Güven fonu doktrini, özellikle sermaye stoğundaki azalmalarla ilgili olarak, alacaklıların haklarının korunmasını ve kurumsal varlıkların haksız yere tüketilmemesini sağlamak için önemlidir.

Çıkarım — Kurumsal yönetim ve uyumluluk için, temel eylemler için hissedar onayının gerekliliği ve alacaklı haklarının korunması da dahil olmak üzere kurumsal güçlerin kapsamını ve sınırlamalarını anlamak esastır.