A family corporation should serve as a reward for years of hard work as a

A family corporation should serve as a reward for

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A family corporation should serve as a reward for years of hard work— as a rallying point for family unity and prosperity, not as a flashpoint for familial strife. ( Gala v. Ellice Agro-Industrial Corp., 418 SCRA 431 [2003]) CLOSE CORPORATIONS
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The articles of incorporation of a close corporation may provide: 1. For a classification of shares or rights and the qualifications for owning or holding the same and restrictions on their transfers as may be stated therein, subject to the provisions of the following section; 2. For a classification of directors into one or more classes, each of whom may be voted for and elected solely by a particular class of stock ; and 3. For a greater quorum or voting requirements in meetings of stockholders or directors than those provided in this Code. The articles of incorporation of a close corporation may provide that the business of the corporation shall be managed by the stockholders of the corporation rather than by a board of directors. CLOSE CORPORATION’S AOI
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Restrictions on the right to transfer shares must appear in the articles of incorporation and in the by-law s as well as in the certificate of stock ; otherwise, the same shall not be binding on any purchaser thereof in good faith. Said restrictions shall not be more onerous than granting the existing stockholders or the corporation the option to purchase the shares of the transferring stockholder with such reasonable terms, conditions or period stated therein. If upon the expiration of said period, the existing stockholders or the corporation fails to exercise the option to purchase, the transferring stockholder may sell his shares to any third person. RESTRICTION ON TRANSFER OF SHARES SEC. 98 & 99, BP BLG. 68
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The transferee is conclusively presumed to have notice of the restriction or condition on shares of stock transferred. The corporation cannot be compelled to register the transfer of stock in the name of the transferee. The transfer, however, shall be binding upon the corporation where it has been consented to by all stockholders of the close corporation. The breach of any restriction in the issuance or transfer of stock is without prejudice to the right of the transferee to rescind the transaction or recover warranty, express or implied. BREACH OF QUALIFYING CONDITIONS
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A preemptive right is a privilege that may be extended to certain shareholders of a corporation that grants them the right to purchase additional shares in the company prior to shares being made available for purchase to the general public in the event of a seasoned offering, which is a secondary issuing of stock shares. The pre-emptive right of stockholders in close corporations shall extend to all stock to be issued, including reissuance of treasury shares, whether for money, property or personal services, or in payment of corporate debts , unless the articles of incorporation provide otherwise.
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  • Fall '19
  • Gilbert R. Huafana

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