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    No. 3 Mercantile Bar 2017

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    Venice Santibanez
    Sid used to be the majority stockholder and president of Excellent Corporation, but when Meridian Company took control of Excellent, Sid became a minority stockholder and board member. Excellent became a monopoly in the beverage industry. Sid questioned management decisions at board meetings. Sid demanded to inspect Excellent's books and records but management refused, saying his rights as a minority stockholder were reduced. Under Philippine law, a minority stockholder has the right to inspect corporate books and records if the inspection is done during reasonable business hours at the principal office, the stockholder has not improperly used prior information, and the demand is made in good faith and for a legitimate purpose related to their interests as a stockholder. The

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    No. 3 Mercantile Bar 2017

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    Venice Santibanez
    67 views2 pages
    Sid used to be the majority stockholder and president of Excellent Corporation, but when Meridian Company took control of Excellent, Sid became a minority stockholder and board member. Excellent became a monopoly in the beverage industry. Sid questioned management decisions at board meetings. Sid demanded to inspect Excellent's books and records but management refused, saying his rights as a minority stockholder were reduced. Under Philippine law, a minority stockholder has the right to inspect corporate books and records if the inspection is done during reasonable business hours at the principal office, the stockholder has not improperly used prior information, and the demand is made in good faith and for a legitimate purpose related to their interests as a stockholder. The

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    Sid used to be the majority stockholder and president of Excellent Corporation, but when Meridian Company took control of Excellent, Sid became a minority stockholder and board member. Excellent became a monopoly in the beverage industry. Sid questioned management decisions at board meetings. Sid demanded to inspect Excellent's books and records but management refused, saying his rights as a minority stockholder were reduced. Under Philippine law, a minority stockholder has the right to inspect corporate books and records if the inspection is done during reasonable business hours at the principal office, the stockholder has not improperly used prior information, and the demand is made in good faith and for a legitimate purpose related to their interests as a stockholder. The

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    67 views2 pages

    No. 3 Mercantile Bar 2017

    Uploaded by

    Venice Santibanez
    Sid used to be the majority stockholder and president of Excellent Corporation, but when Meridian Company took control of Excellent, Sid became a minority stockholder and board member. Excellent became a monopoly in the beverage industry. Sid questioned management decisions at board meetings. Sid demanded to inspect Excellent's books and records but management refused, saying his rights as a minority stockholder were reduced. Under Philippine law, a minority stockholder has the right to inspect corporate books and records if the inspection is done during reasonable business hours at the principal office, the stockholder has not improperly used prior information, and the demand is made in good faith and for a legitimate purpose related to their interests as a stockholder. The

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 2

    Note: I will give the answer but ikaw nai bahala mo himo

    og explanation. Work your brain not your eyes and


    hands.
    III. B. Sid used to be the majority stockholder and President of Excellent
    Corporation (Excellent). When Meridian Co., Inc. (Meridian), a local
    conglomerate, took over control and ownership of Excellent, it brought along
    its team of officers. Sid thus became a minority stockholder and a minority
    member of the Board of Directors. Excellent, being the leading beverage
    manufacturer in the country, became the monopoly when Meridian's own
    beverage business was merged with Excellent's, thereby making Excellent
    virtually the only beverage manufacturer in the country.

    Left out and ignored by the management, Sid became a fiscalizer of sorts,
    questioning during the Board meetings the direction being pursued by
    Excellent's officers.

    Ultimately, Sid demanded the inspection of the books and other corporate
    records of Excellent. The management refused to comply, saying that his right
    as a minority stockholder has been much reduced.

    State under what conditions may Sid properly assert his right to inspect the
    books and other corporate records of Excellent. Explain your answer. (3%)

    REQUIREMENTS FOR THE EXERCISE OF THE RIGHT OF INSPECTION (SEC. 74)


    (1) It must be exercised at reasonable hours on business days and in the
    place where the corporation keeps all its records (i.e., principal office).
    (2) The stockholder has not improperly used any information he secured
    through any previous examination.
    (3) Demand is made in good faith or for a legitimate purpose. If the
    corporation or its officers contest such purpose or contend that there is evil
    motive behind the inspection, the burden of proof is with the corporation or
    such officer to show the same.
    TEST to determine whether the purpose is legitimate – A legitimate purpose
    is one which is germane to the interests of the stockholder as such and not
    contrary to the interests of the corporation. [Gokongwei v. SEC (1979)]
    Among the changes introduced in the new Code with respect to the right of
    inspection granted to a stockholder are the following:
    (1) The records must be kept at the principal office of the corporation;
    (2) The inspection must be made on business days;
    (3) The stockholder may demand a copy of the excerpts of the records or
    minutes;
    (4) The refusal to allow such inspection shall subject the erring officer or
    agent of the corporation to civil and criminal liabilities.

    However, while seemingly enlarging the right of inspection, the new Code
    has prescribed limitations to the same. It is now expressly required as a
    condition for such examination that the one requesting it must not have
    been guilty of using improperly any information through a prior examination,
    and that the person asking for such examination must be "acting in good
    faith and for a legitimate purpose in making his demand." [Gonzales v. PNB
    (1983)]

    Directors of a corporation have the unqualified right to inspect the books and
    records of the corporation at all reasonable times. The right of inspection is
    not to be denied on the ground that the director or shareholder is on
    unfriendly terms with the officers of the corporation whose records are
    sought to be inspected. A director or stockholder can make copies, abstracts,
    and memoranda of documents, books, and papers as an incident to the right
    of inspection, but cannot, without an order of a court, be permitted to take
    books from the office of the corporation. However, a director or stockholder
    does not have any absolute right to secure certified copies of the minutes of
    the corporation until these minutes have been written up and approved by
    the directors. [Veraguth v. Isabela Sugar (1932)]

    A stockholder of a sequestered company has the right to inspect and/or


    examine the records of the corporation pursuant to Sec. 74 of the
    Corporation Code. [Africa v. PCGG
    (1992)]

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