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Reviewer in Business Laws and Regulations
Management Accounting (Carlos Hilado Memorial State College)
Studocu is not sponsored or endorsed by any college or university
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Reviewer in Business Laws and Regulations
Corporation
Title I – General Provisions
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Corporation – is an artificial being created by operation of law, having the right of succession and the
powers, attributes and properties expressly authorized by law or incidental to its existence.
Government Owned or Controlled Corporations (GOCC) refers to any agency organized as a stock or
non-stock corporation, vested with functions relating to the public needs whether governmental or
proprietary in nature.
Succession (Artificial Succession) is the continuation of a corporation’s legal status despite changes in
ownership or management.
Non-stock Corporation is one where no part of its income is distributable as dividends to its members,
trustees, or officers.
Public Corporation is a corporation organized for the government of a portion of the State for the
general good and welfare.
Private Corporation is formed for some private purpose, benefit or end.
Quasi-public Corporation is a private corporation which has accepted from the State the grant of
franchise or contract.
De jure Corporation is a corporation created in strict or substantial conformity with the mandatory
statutory requirements for incorporation.
De facto Corporation is the due incorporation of any corporation claiming in good faith to be a
corporation under this Code.
Corporation by estoppel – all persons who assume to act as a corporation knowing it to be without
authority.
Corporation by prescription – one which has exercised corporate powers for an indefinite period
without interference.
Domestic Corporation is a corporation incorporated under the laws of the Philippines.
Foreign Corporation is a corporation formed, organized, or existing under any laws other than those of
the Philippines.
Open Corporation is a corporation which is open to any person who may wish to become a stockholder
or member.
Parent or holding corporation holds stocks in another corporation for purposes of control.
Subsidiary Corporation – more than 50% of the voting stock of which is controlled directly or indirectly.
Corporation aggregate – consisting of more than one member.
Corporation sole – consisting of only one member.
Ecclesiastical corporation – organized for religious purposes.
Lay corporation – organized for a purpose other than for religion.
Eleemosynary Corporation – organized for charitable purposes.
Civil Corporation – organized for the business or profit.
General Law – formed or organized is the Corporation Code.
Special Law – referred often as a charter.
Corporators – who compose a corporation, whether as stockholders or as members.
Incorporators – stockholders and members mentioned in the articles of incorporation.
Members – the corporators of a non-stock corporation.
Board of Directors – governing body in a stock corporation.
Board of Trustees – governing body in a non-stock corporation.
Subscribers – persons who have agreed to take and pay for original and unissued shares of a
corporation.
Underwriter – person who guarantees on a firm commitment and declared best effort basis the
distribution and sale of securities.
Promoter – a person who brings about formation and organization of a corporation.
Doctrine of Equality of Shares – each share shall equal in all respects (assets and liabilities).
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Voting Shares – shares with a right to vote.
Non-voting Shares – shares without a right to vote.
Common Stock – a class of stock entitling the holder to vote on corporate matters.
Preferred Stock – which entitles the holder thereof to certain preferences over the holders of common
stock.
Redeemable Shares – issued by a corporation when expressly provided in the Articles of Incorporation.
Par Value Shares – shares with a value fixed in the articles of incorporation.
No Par Value Shares – shares with no par value.
Promotion/al share – share issued to promoters interested in the company.
Share in Escrow – share subject to an agreement by virtue which the share is deposited by the grantor.
Fractional Share – share that is less than one full share.
Over-Issued Stock – stock or share issued in excess of the authorized capital stock.
Founders’ Shares – shares classified as such in the articles of incorporation which may be given certain
rights or privileges.
Treasury Shares – shares of stock which have been issued and fully paid for.
Trust Fund Doctrine – underlying principle in the procedure for the distribution of capital assets.
Watered Stocks – stocks issued for a consideration less than the par or issued price.
Title II – Incorporation and Organization of Private Organizations
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One Person Corporation – corporation with a single stockholder.
Revival of Corporate Existence – corporation whose term has expired may apply for a revival of
corporate existence.
Subscription – written contract to purchase newly issued shares of stock or bonds.
Paid-up Capital – portion of the authorized capital stock which has been both subscribed and paid.
Articles of Incorporation – defines the charter of the corporation.
Authorized Capital Stock – maximum amount fixed in the articles of incorporation.
Doctrine of Estoppel – predicated on, and has its origin in, equity which, broadly defined, is justice
according to natural law and right.
Title III – Board of Directors/Trustees and Officers
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Independent Director is a person who, apart from shareholdings and fees received from the
corporation.
Corporate Officer – position must be expressly mentioned in the by-laws in order to be considered as a
corporate office.
Replacement Director/Trustee – shall serve only for the unexpired term of the predecessor in office.
Bad Faith – breach of faith and willful failure to respond to plain and well understood obligation.
Gross Negligence – is the want of even slight care, acting and omitting to act in a situation where there
is duty to act.
Self-Dealing Directors/Trustees/Officers – contract of the corporation with one or more of its
directors or trustees, officers, or their spouses and relatives within fourth civil degree.
Interlocking Directors – members of the board of directors in a certain corporation who are also
directors in another corporation.
Substantial Interest – stockholdings exceeding 20% of outstanding capital stock.
Doctrine of Corporate Opportunity – a director, by virtue of his office, acquires for himself a business
opportunity which belong to the corporation.
Executive Committee -body created by the by-laws and composed of not less than three members of the
board.
Title IV – Powers of Corporations
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Derivative Suit – action brought by a stockholder on behalf of the corporation to enforce corporate
rights against the corporation’s directors, officers, or other insiders.
Appraisal Right means that a stockholder who dissented and voted against the proposed corporate
action.
Bonded Indebtedness is a long-term indebtedness secured usually by real property.
Pre-emptive Right – it is the preferential right of all stockholders of a stock corporation to subscribe to
all issues or disposition of shares of any class, in proportion to their respective shareholdings.
Funds – any corporate property to be used in furtherance of business.
Retained Earnings – accumulated profits realized out of normal and continuous operations of the
business after deducting therefrom distributions to stockholders and transfers to capital or other
accounts.
Unrestricted Retained Earnings – retained earnings which have not been reserved or set aside by the
board of directors for some corporate purpose.
Dividends – corporate profits set aside, declared, and ordered to be paid by the directors for distribution
among stockholders at a fixed time.
Cash Dividends – part of general fund.
Stock Dividends – part of capital.
Management Contract – it is an agreement whereby a corporation delegates the management of its
affairs to another corporation.
Ultra Vires Act – act outside or beyond corporate powers, including those that may ostensibly be within
such powers but are, by general or special laws, prohibited or declared illegal.
Title V – Bylaws
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By-laws signifies the rules and regulations or private laws enacted by a corporation.
Title VI – Meetings
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Remote Communication – the transfer of data between two or more devices not located at the same
site.
Teleconferencing – holding of a conference among people remote from one another by means of
telecommunication devices such as telephone or computer terminals.
Videoconferencing – holding of a conference among people in remote locations by means of transmitted
audio and video signals.
Computer Conferencing – teleconferencing supported by one or more computers.
Audio Conferencing – conference in which people at different locations speak to each other via
telephone or Internet connections.
Stock and Transfer Book – book which records the names and addresses of all stockholders
alphabetically, the installments paid and unpaid on all stock for which the subscription has been made,
date of payment thereof; a statement of every alienation, sale or transfer of stock made, the date thereof
and by and to whom made; and such other entries as may be prescribed by the law.
Voting Trust Agreement – governed by the law on trust.
Proxy – governed by the law on agency.
Title VII – Stocks and Stockholders
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Subscription Contract – any contract for the acquisition of unissued stock in an existing corporation or
a corporation still to be formed shall be deemed a subscription notwithstanding the fact that the parties
refer to it as a purchase or some other contract.
Transfer – act which the owner of a thing delivers it to another with intent of passing the rights.
Highest Bidder – who shall offers to pay the full amount of the balance on the subscription together with
accrued interest, costs of advertisement, and expenses of sale.
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Individual Suit – where a stockholder or member is denied the right of inspection, his suit would be
individual because the wrong is done him personally.
Class/Representative Suit – where the wrong is done to a group of stockholders.
Derivative Suit – where the acts complained of constitute a wrong to the corporation itself.
Pre-incorporation subscription – a subscription of shares of stock of a corporation still to be formed.
Post-incorporation subscription – a subscription entered into after a corporation for the acquisition of
unissued stock.
Shares of Stock – unit of interest in a corporation.
Certificate of Stock – evidence of the holder’s ownership of the stock and of his right as a shareholder.
Title VIII – Corporate Books and Records
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Stock Transfer Agent – one engaged principally in the business of registering transfers of stocks in
behalf of a stock corporation.
Title IX – Merger and Consolidation
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Merger – union whereby one or more existing corporations are absorbed by another corporation that
survives and continues the combined business.
Consolidation – union of two or more existing entities to form a new entity.
Title X – Appraisal Right
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Appraisal Right – stockholder who dissented and voted against the proposed corporate action.
Title XI – Non-Stock Corporation
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Stock Corporation – stock divided into dividends; organized for profit.
Non-stock Corporation – no capital stock; not organized for profit.
Title XII – Close Corporation
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Right of first refusal – the stockholders who wants to sell his shares to any third persons must offer it
either to the corporation or to other existing stockholders.
Provisional director – an impartial person who is neither a stockholder nor a creditor of the
corporation or of any subsidiary or affiliate of the corporation, and whose further qualifications, if any,
may be determined by the SEC.
Title XIII – Special Corporations
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Non-stock Educational Corporation – board of trustees shall not be less than 5 nor more than 15.
Stock Educational Corporation – board of directors shall be the same as in ordinary stock corporation
which is not less than and not more than 15.
A foreign natural person may put up an OPC, subject to the applicable capital requirement,
constitutional, and statutory restrictions on foreign participation in certain investment areas or activities.
Title XV – Foreign Corporations
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Resident Agent – individual residing in the Philippines.
Doctrine of Isolated Transactions – foreign corporations, even unlicensed ones, can sue or be sued on a
transaction or series of transactions set apart from their common business.
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