CORPORATION LAW (2019) MIDTERM REVIEWER ATTY.

GAVIOLA-CLIMACO

Recap:

By laws – are internal rules governing the

relationship between the corporation and
stockholders

- Failure to adopt the by-laws does not

automatically dissolve a corporation but the failure
to adopt may be a ground to revoke or suspend the
corporate franchise

- The by-laws are binding because these are

precisely internal rules to the corporation and
stockholders. It is not necessarily binding to third
persons who are not privy to the provisions of the
by-laws

- By-laws cannot be contrary to the

Constitution, to the Corporation Code, other laws
and statutes and it cannot also be contrary to the
provisions of the Articles of Incorporation but
outside of those limitations, the corporation and the
stockholders may provide for whatever rules and
regulations they need and deem necessary for the
efficient and effective conduct of the corporation

AMENDMENT OF BY LAWS

- May be done by a majority vote of the

BOD and vote of the owners of at least the
majority of the Outstanding Capital Stock (OCS)

- So there should be 2 approvals. It

should pass 2 tests.

a. First Test: Majority of the board of

directirs directors – 50% plus 1 (out of 5
directors, 3 is the majority, you count by person
or by director)

b. Second Test: By a vote of the owners of

at least the majority of the Outstanding Capital
Stock (OCS)

 To determine the majority of the OCS,

we look at the shares, 50% plus 1 of the
shares held by the stockholders
including the directors so you count by
shares

 For example, there are 5 directors and 4

directors have 4 shares each while the
other director has 996 shares out of
1000 shares. Such director is the owner
of the majority of the outstanding
capital stock

 Take Note: these shares are subscribed

shares since these are actually owned
by the stockholders

CENIZA | FONTANOSA | GABUNADA | GEGANTO | GEONZON | GLORIA | JUMAO-AS | KE-E | MALAZARTE | MARTINQUILLA | MATA | SEÑAGAN | WEE
U N I V E R S I T Y O F S A N C A R L O S | PAGE 1 OF 1