ASSIGNMENT IN BUSINESS ORGANIZATION II

1. Give the number and qualifications of Incorporators.

Any person, partnership, association or corporation, singly or jointly with others but not more
than fifteen (15) in number, may organize a corporation for any lawful purpose or
purposes: Provided, That natural persons who are licensed to practice a profession, and
partnerships or associations organized for the purpose of practicing a profession, shall not
be allowed to organize as a corporation unless otherwise provided under special laws.
Incorporators who are natural persons must be of legal age.

Each incorporator of a stock corporation must own or be a subscriber to at least one (1)
share of the capital stock.

2. For how long will corporations exist?

A corporation shall have perpetual existence unless its articles of incorporation provides
otherwise.

3. When does the life of the corporation begin?

Upon the issuance of the Certificate of Incorporation by the SEC

4. How can the term of the corporation be extended or shortened?

A corporate term for a specific period may be extended or shortened by amending the
articles of incorporation: Provided, That no extension may be made earlier than three (3)
years prior to the original or subsequent expiry date(s) unless there are justifiable reasons
for an earlier extension as may be determined by the Commission: Provided, further, That
such extension of the corporate term shall take effect only on the day following the original or
subsequent expiry date(s).

5. Why is corporation name important?

a. For identity purposes
b. Used in dealing with business transactions

6. Why is the place of principal office important?

a. This is where the meetings of stockholders/members is being held, or in the
municipality or city where the principal place of business is located;
SPECIAL MEETING-
REGULAR MEETING-
b. Where records/books are being kept (for inspection and regulation of SEC);
WHO HAS THE RIGHT?
-stockholders/members
-trustees/directors
-SEC
c. Determines the venue of the action and service of summons;
d. Determines what LGU governs for the payment of corresponding taxes.

7. Why is purpose clause important?

a. For the officers and members of the board to know the limits of their authority to act
and on what act they are authorized to do, otherwise the act would be considered
ultra vires(outside the power of the corporation to act);
b. For the third persons to know the business of the corporation so that they can
transact business legally and to know if the members are acting within their authority.

8. Give the effects on non-use of corporate charter and continuous

inoperation of a corporation.
 2

If a corporation does not formally organize and commence its business within five (5) year
from the date of its incorporation, its certificate of incorporation shall be deemed revoked as
of the day following the end of the five (5)-year period.

However, if a corporation has commence its business but subsequently becomes inoperative
for a period of at least five (5) consecutive years, the Commission may, after due notice and
hearing, place the corporation under delinquent status.

A delinquent corporation shall have a period of two (2) years to resume operations and
comply with all requirements that the Commission shall prescribed. Upon the compliance by
the corporation, the Commission shall issue an order lifting the delinquent status. Failure to
comply with the requirements and resume operations within the period given by the
Commission shall cause the revocation of the corporation's certificate of incorporation.

The Commission shall give reasonable notice to, and coordinate with the appropriate
regulatory agency prior to the suspension or revocation of the certificate of incorporation of
companies under their special regulatory jurisdiction.

9. Give the number, term, and the qualifications of the

directors/trustees?
See Section 22

10. Discuss the “Business Judgment Rule.”

Questions of policy or management are left solely to the honest decision of officers and
directors of a corporation and the courts are without authority to substitute their judgment for
the judgment of the board of directors.

11. Who are the corporate officers of a corporation?

Immediately after their election, the directors of a corporation must formally organize an
elect: (a) a president, who must be a director; (b) a treasurer, who must be a resident of the
Philippines; and (d) such other officers as may be provided in the bylaws. If the corporation
is vested with public interest, the board shall also elect compliance officer. The same person
may hold two (2) or more positions concurrently, except that no one shall act as president
and secretary or as president and treasurer at the same time, unless otherwise allowed in
this Code.

The officers shall manage the corporation and perform such duties as may be provided in
the bylaws and/or as resolved by the board of directors.

12. Who may remove any corporate officers?

the BOARD
IF THERE’S NO BOARD, DOLE SHALL GOVERN THE REMOVAL.
KNG OUTSIDER, CANNOT BE REMOVED WITHOUT DUE PROCESS. LAW IS
GOVERNED BY THE NLRC.

13. Who may remove any director or trustee?

See Section 27

14. Give the process of incorporation.

a. Submission and reservation of corporate name
b. Initial submission of the articles of incorporation and by-laws for the review of the
Commission’s processors
c. Submission of the signed and notarized articles of incorporation & by-laws
d. Upon approval & payment of the registration fees, the issuance of the certificate of
incorporation with the attached signed & notarized articles of incorporation & by-laws
 3

15. The Articles of Incorporation to be registered in the

Securities and Exchange Commission contained the
following provisions:

a. “First Article. The name of the corporation shall

be Tuburan Water Supply Company.”

b. “Second Article. The principal office of the

corporation shall be located in Jaro, Iloilo City,
as may be designated by the Board of
Directors.”

c. “Third Article. The term of the corporation will

depend on the will of the stockholders, but not
more than 50 years.”

d. “Fourth Article. The capital stock of the

corporation is Five Million Pesos
(P25,000,000.00), Philippine Currency.”

What are your comments and suggested changes to the

proposed articles?