MATTERS WHERE THE LAW REQUIRES SPECIFIC NUMBER OF VOTES A. Voting shares or members 1.

2/3 a) b) c) d) e) voting shares or members: Removal of directors ( Sec. 28) Ratification of directors or officers contract with the corporation (Sec. 32) To extend or shorten corporate term (Sec. 37) Issuance of stock dividends (Sec. 43) - meeting Adoption of plan for distribution of assets of a non-stock corporation (Section 95)

2.

Majority voting shares or members: a) Election of directors (Sec. 24) or filling vacancies in Board of Directors b) Granting of compensation to directors (Sec. 30) c) To enter into a management contract majority of the outstanding capital stock or the members (voting shares or members only) of both the managed and the managing corporations, and in some cases, 2/3 of the total outstanding capital stock entitled to vote or of the members with respect to the managed corporation (Sec. 44) meeting d) Fixing the price or value of no par value shares (Sec. 62)

B.

Voting and Non-Voting Shares or Members 1. 2/3 voting and non-voting shares or members: a) b) c) d) e) f) g) h) 2. Amendment of the articles of incorporation (Sec. 16) written assent/meeting Increase or decrease of the capital stock (Sec. 38) meeting Incurring, creating or increasing bonded indebtedness (Sec. 38) meeting Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of the corporate property (Sec. 40) meeting Investment of corporate funds in another corporation or business or for any purpose other than its primary purpose meeting Delegation to the board of directors of the power to amend, repeal the by-laws or adopt new bylaws. To enter into merger or consolidation (Sec. 77) To dissolve the corporation ( Sec. 118, 119)

Majority voting and non-voting shares or members a) Adoption of by-laws (sec. 46) written assent/meeting b) Amendment or repeal of by-laws or adoption of new by-laws meeting c) Revocation of the authority delegated to the Board of Directors to amend, repeal the by-laws or adopt new by-laws - meeting

CASES IN WHICH THE STATUTE DETERMINES THE VOTE REQUIRED. In the following cases, the law determines the number of votes required and consequently, the by-laws cannot provide otherwise: 1. 2. 3. 4. 5. 6. 7. 8. 9. Issuance of stock dividends approval of stockholders representing not less than 2/3 of the OCS. Increase or diminution of capital 2/3 of the OCS. Incurring, creating or increasing bonded indebtedness 2/3 of the OCS in case of stock corporations or 2/3 of the members of non-stock corporations. Investment of corporate funds in any other corporation, etc. approval of stockholders representing not less than 2/3 of the OCS. Amendment of the Articles of Incorporation- 2/3 of its members, if a Non-stock Corporation, or stockholders representing at least 2/3 of the OCS if a stock corporation. Adoption of the by-laws stockholders representing a majority of all OCS, if a stock corporation, or majority of the members, if an non-stock corporation. Amendment, repeal or adoption of new by-laws- owners of the majority of the subscribed capital stock if a stock corporation or majority of the members, if a non-stock corporation. Delegation to the board of power to amend, repeal or adopt new by-laws owners of 2/3 of the OCS or 2/3 of the members, if there be no capital stock. Revocation of the delegated powers stockholders owning or representing a majority of the OCS or a majority of the members in a non-stock corporation.

10. Election of directors owners of the majority of the OCS, or if there be no capital stock, a majority of the members entitled to vote; 11. Removal of directors or trustees stockholders holding or representing 2/3 of the OCS or if the corporation be a non-stock corporation, by a vote 2/3 of the members entitled to vote. 12. Sale or disposition of all or substantially all of the assets of a corporation the vote of the stockholders representing at least 2/3 of the OCS, or in case of non-stock corporation, by the vote of at least 2/3 of the members. 13. Voluntary Dissolution affirmative vote of the stockholders owning at least 2/3 of the OCS or at least 2/3 of the members. 14. Grant of compensation to directors vote of the stockholders representing at least majority of the OCS at the regular or special meeting (Sec. 30) 15. Ratification of a corporate contract with a director or trustees the vote of stockholders representing 2/3 of the OCS or of 2/3 of the members in a meeting called for the purpose. 16. Ratification of extension or shortening of the corporate term by the stockholders representing 2/3 of OCS or at least 2/3 members in case of non-stock corporation. 17. Approval of management contracts with another corporation-by stockholders owning at least majority of the OCS or by at least a majority of the members if non stock. Exception is in case of interlocking stockholders representing the same interest of both the managing and managed corporations own and control more than 1/3 of the OCS entitled to vote of the managing corporation or when majority of the BOD of the managing corporation also constitute a majority of the BOD of the managed corporation, it shall be approved by 2/3 votes of the OCS entitled to vote (voting only) of the managed corporation or 2/3 votes of the members in non-stock corporation. 18. Filling vacancies in the Board of Director or trustees the vote of at least a majority of the remaining directors or trustees. 19. Ratification of merger or consolidation the affirmative vote of stockholders representing at least 2/3 of the OCS or 2/3 of the members of each constituent corporation.

WHEN INTERVENTION OF STOCKHOLDERS IS REQUIRED: The following acts require the intervention of stockholders by express statutory provision: Amendment of the Articles of Incorporation. Election of the Board of Directors or Trustees. Removal of Directors Filling of vacancies in the Board of Directors or trustees. Fixing of compensation of directors or trustees as such. Ratification of directors contract with their corporation. Extension or shortening of the corporate term. The increase or decrease of the capital stock and the incurring, creation or increase of bonded indebtedness. 9. Issue of shares without pre-emptive right. 10. Sale or other disposition of all or substantially all corporate assets. 11. Investment of corporate funds in another corporation or for a purpose other than the principal corporate purpose. 12. Declaration of stock dividends. 13. Approval of management contract with another corporation. 14. Adoption or amendment of by-laws. 15. Approval of the plan of merger or consolidation. 16. Voluntary dissolution of the corporation 1. 2. 3. 4. 5. 6. 7. 8.

CORPORATIONS IN WHICH PHILIPPINE CITIZENSHIP IS REQUIRED: By provisions of law, Filipino citizenship of a certain percentage of the capital stock or capital is required in the following cases: a. b. c. Public utilities at least 60% of the capital of which is owned by Filipinos (Sec. 11, Art. XII, 1987 Phil. Constitution) Corporations for development or exploitation of natural resources at least 60% of the capital of which is owned by Filipinos (Sec. 2, Art. XII, 1987 Phil. Constitution) Corporation engaged in mass media wholly owned and managed Filipinos (Sec. 11(1), Art. XVI, 1987 Constitution)

d.

Educational Institutions other than those established by religious orders, mission boards and other charitable organizations at least 60% of the capital of which is owned by Filipinos. (Sec. 4(2), Art. XIV, 1987 Constitution) e. Corporations engaged in coastwise shipping at least 60% of the capital stock which is owned by Filipinos ( P.D. No. 1464) f. Civil aeronautics corporations at least 60% of the capital stock of which is owned by Filipinos (R.A. No. 776) g. Corporations engaged in cottage industries at least 75% of the capital of which is owned by Filipinos ( R.A. No. 3470 as amended by R.A. No. 5326) h. Financing companies at least 60% of the capital of which is owned by Filipinos. ( R.A. No. 5980) i. Pawnshops at least 70% of the capital of which is owned by Filipinos ( P.D. No. 114) j. Corporations engaged in the rice and corn industry wholly owned by Filipinos ( R.A. No. 3018 as amended) k. Security, watchmen or detective agencies wholly owned by Filipinos ( R.A. No. 5487 as amended) l. Atomic energy corporations at least 60% of its capital is owned by Filipinos ( R.A. No. 5207) m. Banking corporations at least 60% of the voting stock is owned by Filipinos (R.A. No. 8791) n. Rural Banks Capital stock shall be 100% owned and held by Filipinos (R.A. No. 7353) o. Savings and loans associations at least 70% of the voting stock to be owned by Filipinos (R.A. N0. 3779 as amended by R.A. No. 4378 and P.D. No.113)

Important Doctrines: 1. Doctrine of the Piercing the Veil of the Corporate Fiction - When corporations are organized in a manner which is detrimental to the society such as for the protection of fraud and for tax evasion, such corporate entity will be disregarded and considered as a mere association of persons and all members thereof will be personally liable. Doctrine of Business Opportunity (Sec. 34) - This principle reiterates that no director of a corporation shall place his personal interest over and above the interest of the corporation. Thus a director is given a business opportunity which the corporation can financially take advantage of considering the director is expected to turn over such business opportunity to the corporation. Trust Fund Theory (Sec. 65) - A subscriber or stockholder shall be considered a trustee for his unpaid subscription by the corporation and the corporate creditors until such unpaid balance of the said subscription is fully paid. Trust Fund Doctrine (Sec. 122) There are two concepts of this doctrine whereby the stockholders who received the corporate assets are deemed trustees for such property or assets received by them under the following instances: a) When a solvent corporation, through its Board of Directors, distributes all its corporate assets to its stockholders, the corporate creditors can sue directors and recover the assets from the stockholders; b) In dissolved corporation, the corporate creditors may also sue the directors if the assets are distributed to the stockholders without first liquidating all corporate liabilities and recover such assets from the stockholders. Doctrine of Limited Capacity Under Section 2 of the New Corporation Code, a corporation has only such powers as are expressly granted, are necessarily implied from those expressly granted and those incident to its existence.

2.

3. 4.

5.