5) Obligations of a stockholder 1. Liability to the corporation for unpaid subscription; 2.

Liability to the creditors of the corporation for unpaid subscription; 3. Liability to the corporation for interest on unpaid subscription if so required by the by-laws; 4. Liability for watered stocks; 5. Liability for dividends unlawfully paid; 6. Liability for failure to create corporation. 6) Meetings a.) Regular or special i.) When and where Regular meeting: held annually on a date fixed in the by-laws, or o if not fixed, any date in April of every year as determined by the Board of Directors or Trustees. Special meeting: held at any time deemed necessary or as provided in the bylaws; Regular or Special meeting shall be held in the city or municipality where the principal office of the corporation is located, and if practicable, in the principal office of the corporation; o Such location is MANDATORY; failure to comply would render the meeting ILLEGAL o EXCEPTION: (such meeting shall be valid even if not held in the proper place) when all the stockholders or members of the corporation are present or duly represented in the meeting. ii.) Notice Regular meeting: written notice shall be sent to all stockholders or members of record at least two (2) weeks prior to the meeting, unless a different period is required by the by-laws. Special meeting: written notice shall be sent to all stockholders or members one (1) week prior to the meeting, unless otherwise provided in the by-laws. Notice of the meetings shall be in writing and the place and time thereof stated therein. Notice of any meeting may be waived, EXPRESSLY or IMPLIEDLY, by any stockholder or member. Postponement of the annual stockholders meeting may be allowed for justifiable and meritorious reasons provided however that the same be held within reasonable time from the date it has been postponed and that proper notice of the change of the date is given to all stockholders of record. Non-stock corporation o Members may hold their regular or special meetings at any place even outside the place where the principal office is located within the Philippines; provided that proper notice is sent to all members indicating the date, time, and place of meeting.

b.) Who calls the meetings?

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The person or persons designated in the by-laws to have authority to call stockholders or members meeting may validly do so. In the absence of such provision in the by-laws, the meeting may be called by a director or trustee or by an officer entrusted with the management of the corporation unless otherwise provided by law. When there is no person authorized to call a meeting or in the event the person authorized in the by-laws to call a meeting FAILS or REFUSES to call for a meeting, ANY interested stockholder may PETITION the SEC to authorize him to call a meeting, or COMPEL the officers of the corporation to call a meeting.

c.) Quorum Sec 52: unless otherwise provided for in the Code or in the by-laws, a QUORUM shall consist of the stockholders representing a majority of the OUTSTANDING CAPITAL STOCK or a majority of the members in the case of non-stock corporations. o Stock corporation: based on the number of outstanding voting stocks o Non-stock corporation: only those who are actual, living members with voting rights shall b counted in determining the existence of a quorum; DEAD members shall not be counted.

d.) minutes Sec 74 o A record of all minutes of all minutes Kept at the principal office of the corporation Set forth o time and place of holding the meeting o how authorized o the notice given o whether the meeting was regular or special; if special, its object those present and absent o every act done or ordered done in the meeting Upon demand of any director, trustee, shareholder or member, the time when any director, trustee, shareholder or member entered or left the meeting must be noted in the minutes. On similar demand, the YEAS and NAYS must be taken on any motion or proposition, and a RECORD thereof carefully made. The protest of any director, trustee, shareholder or member or any action or proposed action must be recorded in full on his demand. WITHOUT the signature of the secretary of the meeting, an alleged minutes taken at the meeting has NO probative value nor credibility. i.)Board of directors and trustees 1.) Repository of corporate powers Sec 23: unless otherwise provided in the corporation code, all corporate powers shall be exercised by, and all corporate business of such a corporation shall be conducted through, the Board of Directors of the corporation, or trustees to be elected from among the stockholders, or where there is no stock, from among the members of the corporation. The source of power of the Board of Directors is primary and directlyvested, and is not delegated power from the stockholders or members of the corporation. In the absence of statutory provisions to the contrary, the consent of the corporation in all contracts and transactions that it enters into as a contracting party is effected through its Board of Directors under the pipsguro2

doctrine of Centralized Management, in short, the corporations consent is that of its Board of Directors. 2.) Tenure, qualifications and disqualifications of directors Tenure 1 year and until their successors are elected and qualified Hold-over: results If no new Board is elected and qualified after the original 1 year term, then the existing Board, if still constituting a quorum, is still a legitimate Board with full authority to bind the corporation Qualifications Every director must own at least one (1) share of the capital stock of the corporation in his own name or must be a member in case of non-stock corporations. A majority of the directors/trustees must be residents of the Philippines Must be of legal age Disqualifications Must not have been convicted by final judgment of an offense punishable by imprisonment for a period exceeding six (6) years or a violation of the Corporation code, committed within 5 years before the date of his election Sec 19, General Banking Law of 2000: Except for rural banks: no appointive or elective public official, whether full-time or parttime shall at the same time serve as officer of any of the private bank, save in cases where such service is incident to financial assistance provided by the government or a government-owned or controlled corporation to the bank or unless otherwise provided under existing laws.

3.) Elections a.) cumulative voting MANDATORY A voting procedure wherein a stockholder is allowed to concentrate his votes and give one candidate as many votes as the number of directors to be elected multiplied by the number of his shares. b.) straight voting Allows simple majority of the shareholders to elect the entire Board of Directors leaving the minority shareholders unrepresented. Each shareholder simply votes the number of shares he owns for each director nominated. 4.) Removal Must take place either at a regular or special meeting of the stockholders or members called for the purpose; There must be a previous notice to the stockholders or members of the intention to remove The removal must be by vote of the stockholders representing 2/3 of the outstanding capital stock or 2/3 of the members, as the case may be pipsguro3

The director may be removed WITH or WITHOUT CAUSE unless elected by minority, in which case, it is required that there is cause for removal

5.) Filling of Vacancies a.) By stockholders or members: if vacancy results because of; Removal Expiration of term The ground is other than removal or expiration of term where the remaining directors do not constitute a quorum Increase in the number of directors Vacancies must be filled by the stockholders in a regular or special meeting called for that purpose b.) By board if remaining directors constitute a quorum- cases not reserved to stockholders or members. 6.) Compensation Directors and trustees are not entitled to salary or other compensation when they perform nothing more than the usual and ordinary duties of their office, founded on the presumption that directors and trustees render service gratuitously, and that the return upon their shares adequately furnishes the motives for service, without compensation. Sec 30 , Corp Code: there are two (2) ways by which members of the board can be granted compensation apart from reasonable per diems: o (a) when there is a provision in the by-laws fixing their compensation; and o (b) when the stockholders representing a majority of the outstanding capital stock at a regular or special meeting agree to give them compensation Members of the board may receive compensation, in addition to reasonable per diems, when they render services to the corporation in a capacity other than as directors/trustees. Directors of the corporation, being lodged with the corporate powers have three duties to the corporation such as LOYALTY, OBEDIENCE AND DILIGENCE. Whenever these three duties are violated, certainly they will constitute sufficient cause for removal. Disloyalty in particular, as a violation of such duty of director is a sufficient cause for the removal of such officer.

7.) Disloyalty

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