SEC. 73. Books To Be Kept Stock Transfer Agent. - Every Carefully
SEC. 73. Books To Be Kept Stock Transfer Agent. - Every Carefully
SEC. 73. Books To Be Kept Stock Transfer Agent. - Every Carefully
Any stockholder who shall abuse the rights granted under this
section shall be penalized under Section 158 of this Code, without
prejudice to the provisions of Republic Act No. 8293, otherwise known
as the "Intellectual Property Code of the Philippines", as amended, and
Republic Act No. 10173, otherwise known as the "Data Privacy Act of
2012".
The proper custodian of the books, minutes and official records ofa
corporation is usually the corporate secretary. Being the custodian of
corporate records, the corporate secretary has the duty to record and
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prepare the minutes of the meeting. The signature of the corporate secretary
gives the minutes of the meeting probative value and credibility.
General rule:
All the above books and records must be kept at the principal office
of the corporation.
Exception:
The stock and transfer book may be kept in the principal office of the
corporation or in the office of its stock and transfer agent, if any.
Note:
Corporate records, regardless oftheform in which they are stored, shall be
open to inspection by any director, trustee, stockholder or member of the
corporation in person or by a representative at reasonable hours on business days,
and a demand in writing may be made by such director, trustee or stockholder at
their expense, for copies ofsuch records or excerpts from said records.
Note:
A requesting party who is not a stockholder or member of record, or is a
competitor, director, officer, controlling stockholder or otherwise represents the
interests ofa competitor shall have no right to inspect or demand reproduction of
corporate records
Note:
A stock corporation is not precluded from performing or making transfers
of its own stocks, in which case all the rules and regulations imposed on stock
transfer agents, except the payment of a license fee herein provided, shall be
applicable.
Note:
The SEC may require stock corporations which transfer and/or trade
stocks in secondary markets to have an independent transfer agent.
TITLE IX- MERGER AND CONSOLIDATION
TITLE IX
MERGER AND CONSOLIDATION
What is merger?
A merger is a union whereby one or more existing corporations are
absorbed by another corporation that survives and continues the combined
business.
What is consolidation?
A consolidation is the union of two or more existing entities to form a
new entity called the consolidated corporation.
The merger, however, does not become effective upon the mere
agreement of the constituent corporations. Since a merger or consolidation
involves fundamental changes in the corporation, as well as in the rights of
stockholders and creditors, there must be an express provision of law
authorizing them.2
Problem:
F, Inc. and D, Inc. are entities duly registered with the SEC
primarily engaged in the business of granting loans and receiving
deposits from the general public, and treated as banks.
Sometime in 1985, F, Inc. and D, Inc. entered into a merger, with
D, Inc. as the surviving corporation. The articles of merger were
not registered with the SEC due to incomplete documentation. On
August 12, 1985, D, Inc. changed its corporate name to M, Inc. by way of
an amendment to Article 1 of its Articles of Incorporation, but the
amendment was approved by the SEC only on April 3, 1987.
Meanwhile, on May 26, 1986, the Board of Directors of F, Inc.
assigned its assets in favor of D, Inc. which in turn assumed the formers
liabilities.
The business of M, Inc, however, failed. Hence, the Monetary
Board of the Central Bank of the Philippines ordered its closure and with
PDIC as its liquidator.
It appears that prior to the closure of M, Inc., X filed an action for
collection of sum of money against F, Inc. On October 19, 1989, the court
issued a decision in favor of X.
On April 28, 1993, the sheriff levied on 6 parcels of land owned
by F, Inc. and the notice of sale was subsequently published. W was the
highest bidder. New certificates of title covering the subject properties
were issued in favor of W. On September 20, 1994, W sold one of the
subject parcels of land to Z.
On June 14, 1995, M, Inc., represented by PDIC, filed a complaint
for Annulment of Sheriffs Sale, Cancellation of Title and Reconveyance of
Properties against X and Z. M, Inc. alleged that the sale on execution of the
subject properties was conducted without notice to it and PDIC.
In answer, X and Z averred that M, Inc. had no cause of action
against them or the right to recover the subject properties because M, Inc.
is a separate and distinct entity from F Inc. They further contended that
the unofficial merger between F, Inc. and D, Inc. (now M, Inc.) did not take
effect considering that the merging companies did not comply with the
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TITLE IX- MERGER AND CONSOLIDATION
Commission.
official. The new consolidated corporation comes into existence and the
constituent corporations dissolve and cease to exist.6
there is a
liabilities are acquired by the surviving corporation. Although
of their
dissolution of the absorbed corporations, there is no winding up
affairs or liquidation of their assets, because the surviving
corporation
and powers, as well as their
automatically acquires all their rights, privileges
liabilities.
Problem:
On March 29, 1999, Software
Corp., a foreign corporation duly
organized and existing under the laws of the Netherlands, entered into a
software license agreement with A Bank, a domestic
use of its Software corporation, for the
System in the bank's computer system for a period of
20 years.
TITLE IX -
MERGER AND CONSOLIDATION
TITLEX
APPRAISAL RIGHT
Note:
Ina close corporation, any stockholder of a close corporation may, for any
to purchase his shares at their fair value, which
reason, compel the said corporation
shall not be less than their par or issued value, when
the corporation has sufjficient
stock.
assets in its books to cover its debts and of capital
liabilities exclusive
Valuation date
The fair value of the shares of the dissenting stockholder is
determined as of the day prior to the date on which the vote was taken
Note:
Section 81 of the Corporation Code provides that the stockholder may
exercise the right if he or she yoted against the proposed corporateaction andifhe
made a written demand for pavment on the corporation within thirty (30) days
after the date ofvoting.
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TITLE X- APPRAISAL RIGHT
General Rule: is
demands payment of his shares
no
A dissenting stockholder who
from his decision.
longer allowed to withdraw
Exceptions:
1. The corporation consents to
the withdrawal;
action is disapproved by the SEC where its
2. The proposed corporate
approval is necessary;
the
action is abandoned or rescinded by
3. The proposed corporate
corporation; and
stockholder is not entitled to appraisal
4. The SEC determines that such
right.
The costs and expenses of
SEC. 84. Who Bears Costs of Appraisal.
-
General rule:
The corporation shall bear the costs of appraisal.
Exception: the
The fair value ascertained by the appraisers is approximately
same as the price which the corporation may
have offered to pay the
stockholder.
stockholder, in which case they shall be borne by the
Problem:
X and Y are stockholders of Z Corp. Later, Z Corp. decided to
amend its articles of incorporation to remove the
stockholders' pre
emptive rights to newly issued shares of stock. X and Yvoted against the
amendment and demanded payment of their shares at the rate
of P2.27/share based on the book value of the shares.
Z Corp. found the fair value of the shares demanded by X and Y
unacceptable. It insisted that the market value should be the value, or
P0.41/share and that the payment could be made only if Z Corp. had
unrestricted retained earnings in its books to cover the value of the
shares, which was not the case.
Thedisagreement on the valuation of the shares led the parties
to constitute an appraisal committee, each of them nominating a
representative, who together then nominated the third member who
would be chairman of the appraisal committee. The appraisal committee
reported its valuation of P2.54/share for X and Y. Subsequently, X and Y
demanded payment based on the valuation of the appraisal committee.
ZCorp.refused Xand Y's demand as they could be paid only when
the corporation had unrestricted retained
earnings to cover the fair value
of the shares, but that it had no retained
earnings at the time of X and Y's
demand as borne out by its Financial Statements.
Upon z Corp.s refusal to pay, X and Y sued Z Corp. for collection
and damages.
Is Z Corp. correct?
Answer:
A stockholder who dissents from certain corporate actions has
the right to demand payment of the fair value of his or her shares.
This
right, known as the right of appraisal.
Clearly, the right of appraisal may be exercised when there is a
fundamental change in the charter or articles of incorporation
substantially prejudicing the rights of the stockholders. It does not
vest unless objectionable corporate action is taken. It serves the
purpose
of enabling the dissenting stockholder to have his
interests purchased
and to retire from the corporation.
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TITLE X-APPRAISAL RIGHT
who are
equity in trust for the payment of corporate creditors,
preferred in the distribution of corporate assets. The creditors of a
directors will
corporation have the right to assume that the board of
own stock for as
not use the assets of the corporation to purchase its
and liabilities. There can
long as the corporation has outstanding debts
be no distribution ofassets among the stockholders withoutfirst paying
and assets to
corporate debts. Thus, any disposition ofcorporatefunds
the prejudice ofcreditors is null and void2