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good morning class welcome to.the last episode of our.discussion on the long corporation this.morning we're going to discuss the.remaining topics which will not.take us long okay so.so from title 10.uh sorry title 11 to the end.of the corporation code after this one.we are going to discuss.for the revised corporation code.republic act one one two three two.okay we start with the nationality of.corporations.so class as an offshoot of the fact that.the corporation is an artificial being.the law accords the corporation its.nationality.nationality now now the nationality of.the corporation.serves as the legal basis for subjecting.the business.or its activities to the loss economic.and fiscal powers.and various social and financial.financial.policies of the state to which it is.supposed to be belong.so by the national nationality of the.corporation.no um the corporation is being subject.subjected to domestic laws of the.country.by which it is form organized and.existing.there are several tests as you know in.determining what.is the nationality of the corporation.the place of incorporation test provides.that a corporation no is.it is is to be considered a domestic.corporation.if if it is formed organized or existing.under the laws of the philippines now.the place of incorporation test.is the principal test no.that is being used in determining the.nationality.of a corporation now okay.again a corporation is a national of the.country.under whose laws it has been formed.organized.and is existing second is the control.test.now under the control test a corporation.can be considered as.a filipino corporation or domestic.corporation.no if the um.stock if the shares of stocks is owned.by at least filipino.citizens or the mess or a domestic.corporation.so again the threshold amount is that.the stock holdings must be at least 60.owned and controlled by such citizens.okay now the control test.is used now where the 60 40.filipino alien equity ownership is not.in doubt.you apply the control test in case that.there is no doubt.with respect to the uh distribution of.the filipino ownership.and the alien equity ownership now 60.is owned by the filipinos and then 40 is.owned by.foreign citizens okay under the control.test.now the shareholdings in another.corporation shall be considered to be.filipino nationality.when computing the percentage of.filipino equity.of the second corporation now if you.apply the control test you have to.determine.what the shareholdings of a.corporation or a shareholder corporation.now you have to determine.now the percentage of filipino equity of.the second corporation now.control test is applied in the following.exploitation.of natural resources you know which.under the constitution must be.at least 60 percent owned by filipinos.also.all um expedition.to exploit our natural resources must at.least.be um 60 not filipino owned.now this is pursue one to the policy of.the state.to allow the filipinos to.make use of or take advantage.of the resources in the country.now control tests also applied in public.utilities we have seen this in the case.of what the pldt case the gamboa versus.travis case now.and also some other publications for.example meralco.or the manila water or my nila.these are public utilities now the.public utilities.under the constitution must be owned and.controlled by at least 60.of the filipino citizens okay.now mass media now control test is also.applied in mass media.but in mass media under the constitution.this must be 100 percent.filipino owned for example tv stations.no these are subject to 100.um requirement of um.ownership by filipino citizens okay.the cable industry know as a form of of.mass media.now is uh also subject to 100.filipino ownership and control test is.applied.um in this industries industries as well.okay advertising agency or industry.only filipino citizens corporations or.associations with at least.70 percent of whose capital is owned by.such.citizens is allowed to engage in.advertising.industry or business now the third test.or what we call this is a more strict or.a stricter test.than the control test is the grandfather.rule.now if under the control test you have.to determine.if at least 60 no um.of the stockholders or the shares of.stocks is owned by the filipinos that.under the control test.a particular corporation has already.passed.the uh um has already or.a certain corporation is also is already.considered.as a filipino or a domestic corporation.if at least 60 of the shares of stocks.is owned and controlled by such citizens.on the other hand grandfather rule.is stricter in the sense that um in this.method.you have to determine the nationality of.the corporation.by what breaking down the equity.structure of this.shareholder corporation so this is the.um.a certain corporation and you have to go.to the stockholders no which is also.a corporation or another corporation now.you have to break down.equity structure of the investing.corporation or the shareholder.corporation in order to determine.under the grandfather rule if uh.a particular corporation is if it could.be considered as.a filipino corporation now it is called.grandfather will be.because you have determined the.corporate layering.now grandfather case three levels of.determination.from the corporation up to its.what the uh the father which is.what the stockholders or the shareholder.corporation.and then you have to data mean the.nationality.of the grandfather meaning to say the.third level or the third layer.of corporate structure which is what the.shareholder of the shareholder.corporation that is what i mean by the.grandfather rule.it involves the competition of filipino.ownership.now of a corporation in which another.corporation.of a party filipino and party foreign.equity owns capital stock.okay so under the grandfather rule the.percentage of shares.held by the second corporation in the.first is multiplied by the latter's.own filipino equity and the product of.this percentage.or percentages is determined by the.ultimate filipino ownership of the.subsidiary corporation.so you have to determine the equity.structure of the investing corporation.or the shareholder corporation so by.multiplying what.the percentage of shares held by the.second corporation.in the first multiplied by the latter's.own filipino equity.so you have to determine the filipino.equity or.ownership in the shareholder corporation.applying the grandfather rule.example mv corporation and ac.corporation have.equal interest in xyz corporation.mv corporation is 60 filipinos.or owned by filipinos while ac.corporation.is 50 owned by filipinas by the.grandfather rule.mv corporation would have at least 30.percent.filipino owned in xyz interest so you.have their mv.and ac that they are both corporate.staff holder in xyz corporation.mv has 60 owned by filipinos while ac.is 50 owned by filipinos.by the grandfather rule mv corporation.would have 30.filipino interest in xyz that is 60.of 50 while ac corporation would have a.25.filipino interest in xyz corporation.which.is taken from 50 of 50.hence the total filipino interest is.only.what 55.now note that the application of the.test is.limited to the issues of investment only.when the corporation.is less than 60 owned by filipinos.shall the grandfather rule be applied.now you will take no class.in our example flash in your screens now.the.xyz corporation did not pass.60 filipino ownership because again you.have to multiply.what the uh the percentage.owned and the percent the percentage.owned by the shareholder.corporation in the corporation and the.percentage.of filipino ownership in that.corporation.in which case mv would have was 30.filipino interests and then you have 20.filipino interest for ac corporation.so 30 plus 25 equals 55.which is not compliant with the.requirements of the law.which is why under the grandfather rule.xyz corporation.will not be able to surpass the.requirements imposed by the constitution.okay.now class you apply the grandfather rule.and take note of this.only when the corporation is less than.60.owned by filipinos so if.the stock holdings or the shares of.stocks is at least 60.owned by filipinos you do not apply the.grandfather rule what you apply.is the control test now in case.that less than 60 percent now is owned.by filipinos in a particular corporation.that.is the only time that you apply the.grandfather rule in which case.you have to determine the filipino.ownership.of the shareholder corporation in order.to arrive.whether or not the corporation is to be.considered.as a domestic corporation or a filipino.corporation.um or a filipino corporation.okay non-stop corporation let us go to.non-stock corporation class.we have discussed this before that a.non-stop corporation is where no part of.its.income is distributable to its members.trustees or officers.subject to the provisions on the.solution so class.a non-stop corporation is where the.income or the profit of the corporation.is not to be distributed to its members.trustees or that what the board.of or uh the officers.not of the non-stop corporation okay.a non-stop preparation provided any.profit.which a non-stock corporation may obtain.as an incident.its operations shall whenever necessary.or proper be used for the furtherance of.the purpose or purposes.for which it was organized so the profit.of a non-stock corporation goes.to the purpose of the non-stock.corporation or in the furtherance.for the purpose for by which the.corporation was.organized now do not mistake the fact.that a non-stock corporation does not.earn profit.a non-stock corporation can earn profit.but the fact that it earns profit is.only incidental to its.operation now a nasdaq corporation also.has the power to make profits.and engage in business okay.incidental profits obtained from.operations.profit of obtained from investment of.accumulated funds etcetera etcetera.powers necessary in furtherance of.purpose.now the mere realization of profits.out of the operations of a non-stop.corporation.does not automatically result in the.loss of its exemption.from income taxation as long as no part.of its profit.endures the benefit of any stockholder.or individual.now class not this concept means that.whenever a non-stock corporation will.derive profit from its operation.it does not lose its what.exemption from income tax.as long as no part of that particular.profit will endure inherit the benefit.of any stockholder.member or individual we have seen this.in the cases of saint luke's no.um we're in where uh.if or sorry in the case of ymca manila.now in the case of ymca in manila no um.the profits of the non-stock corporation.was um or a.particular profit of the corporation was.used in another um purpose.other than its uh the.uh intended purpose of the corporation.which is why class um there was some.tax assessment in imposed in the past.because the truth tests were in the.non-stop corporation may not be able to.be assessed by income tax.is the the where the profits.is to be distributed by the corporation.so.as long as the corporation does not.distribute the profits to its members.or to the stockholders to its members no.or to its officers.not then it does not lose its exemption.from income tax c class exempted from.income tax for example.religious charitable and educational.institutions now under the constitution.if i'm not mistaken under article 6.section 24.of the constitution no it is exempted.from the imposition of real property tax.as long as the property is uh.exclusively directly you know used.for the purpose for religious charitable.and.what educational uh purposes.now they ex they enjoy tax.exemption no by express provision of the.constitution.but then again class um.this corporation must fulfill the.requirements of the law.meaning to say they uh the properties.must be um directly and exclusively used.for its purpose for example in the case.of ymca class anonymous.as a matter of fact class when i was.still in law school i was able to.play in the badminton court of ymca.which is located in the second floor.they have their.swimming pool sector on floor the second.sword they have a basketball court and a.badminton court.now these are business enterprises.entered into by ymca manila.now because the property is not or has.not been.exclusively used in the furtherance of.the purpose of ymca.then there was an imposition of.income tax now because of the.non-exclusivity.of the use of the property another.example class.of a non-stock corporation is my own.alma mater university of santo tomas or.usd.now in ust we have a car park.where um the car park class you will be.surprised.is hosting the uh amv.college of accountancy and.i.so this property of the you actually usd.is exempt.from payment of real property tax.because it is.an educational institution.exemptions real property tax.however class necronal tax assessment.from the bi are why.because of the use of the car park.no young car partnering in commercial.nasha national educational purpose.when dinners a religious purpose or.india's a charitable purpose.which is why in so far as that.particular parcel of land inside usd is.concerned.uh they are liable to pay income tax and.real property.tax okay.so it is not the earning of incidental.profits that make the.entity non-stock but the actual or legal.authority.to distribute such profits to the.officers or members.so a limo scenario purposes of a.non-stop corporation.just read on your screens now these are.the purposes by which a non-stock.corporation can be organized charitable.religious.educational etc etc okay.rules for distribution of assets upon.the solution okay class tandano.an important aspects a non-stock.corporation class is upon the solution.no asset class amman and stock.corporation.no nonstop corporation.uh teaching of the catholic church.not during the spanish time in the.philippines.dominican friars at that time because of.the mass donations coming from wealthy.filipino families.now class continuing.it was donated no it was donated uh.by a wealthy family.no permanent.i'm not sure if it's the act i have not.seen the contract of the nation.but what i know is.in honor of the king of spain okay.anyway now class these donations.no.for a particular purpose.[Music].so assets held by the corporation upon a.condition requiring return transfer.conveyance.and which condition occurs by reason of.dissolution.donation property at.in case of non-fulfillment or what.failure to fulfill the conditions.imposed by the donor.okay now what about.those assets which have not been imposed.a condition.but is subject to limitations permitting.their use.only for charitable religious etc.purposes.which are engaged in activities with.uh which which are engaged in activities.which are substantially similar.to the purpose by which the property is.donated so class you have to determine.if there is a condition for the return.of the property if there is a condition.for the return of the property upon the.solution you have.to distribute the assets accordingly.now if there is no condition.or if the property has been donated.without a condition.requiring return then you have to.distribute the property of the nasdaq.corporation.to corporations engaged in activities in.the philippines.with substantially similar purpose take.note and take note okay.okay close corporation class memorize.the requirements of a closed corporation.panda.the numbers of stockholders must not.exceed 20.there must be a restriction on the.transfer of issued stocks.which which should not be more onerous.than giving.the right of first refusal in favor of.the stockholder of the corporation.and that the stocks may not be listed in.the stock exchange.nor should they be publicly offered.okay so those are the requisites.of what a close corporation.memorize these requisites okay.now special rule on stock ownership.although.these three requisites are present.no if at least two thirds of the voting.stocks.excuse me or the voting rights.is owned and control or controlled by.another corporation which is not a.closed.corporation then it will not be.considered.as a closed corporation i will repeat.even if these three requisites.will up are present or applies.no if what at least two thirds of the.voting rights.or the voting stocks is owned or.controlled by another corporation.which is not a closed corporation then.you cannot consider that corporation as.a close.preparation okay in a closed corporation.class what is peculiar.is the manner by which the affairs of.the corporation is managed.if it is a closed corporation class.walang board of directors usually.on board of directors the stockholders.themselves can directly manage the.corporation.no and perform the functions of.directors.without need of election no when they.manage stockholders are liable.as directors there is no need to call a.meeting to elect the directors.and the stockholders themselves are.liable for tort.okay business prohibited from.incorporating as a closed corporation.class.familiarize yourselves in these.businesses.these businesses may not register as a.close corporation.take note class mining oil companies.stock exchange.banks insurance companies public.utilities.educational institutions other.corporations declared to be.vested with public interest.they are not allowed or they are.prohibited by law.from registering as a closed corporation.no so in order that to determine class.if the restrictions on the transfer of.share is.valid you have to what.to check the articles of.incorporation the bylaws and the stock.certificate.the restrictions on the transfer of.shares must all.appear in these three documents.otherwise.the restriction will not be binding on.any purchaser.in good.in breach of qualifying conditions if.the stock is issued to any person not.entitled certificate of.chat et cetera okay i give this to you.these are self-explanatory concepts.okay.preemptive write put a star.a five star class.in this concept empty write is a very.important concept.now in the corporation code now class.you will remember.a preemptive right is the right of a.stockholder to subscribe to the unissued.shares of the corporation.now again a preemptive right is the.right of the stockholder.to subscribe to the unissued share of a.corporation now class.preemptive right is different in a.closed corporation.now the treatment of pre-emptive right.is different.in a closed corporation it extends to.all stock to be issued.class including the issuance of treasury.shares.whether for money property or personal.services.or in payment of corporate debts unless.the aoi.provides otherwise class okay.now in a in a closed corporation the.exercise of the preemptive.right applies to all stock to be issued.no including the issuance of a treasury.shares.unless the aoi provides otherwise.okay now deadlocks.now this happens when the business and.affairs of the corporation.can no longer be conducted to the.advantage of the stockholders.in general in case that that the.deadlock exists.any stockholder can file a petition to.the.sec to take necessary steps.to break the deadlock no the sec can.order the amendment of the articles of.incorporation or the bylaws.or to appoint a third party as.a provisional director who is.an impartial person no.a provisional director is not a.stockholder.nor a creditor of the corporation he.must be.independent of of the.existing stockholders he must not be a.receiver.and does not have the title and power.of a custodian or receiver of the.corporation.but a provisional director have all the.rights and powers.of a duly elected director until such.time.that he is removed by the sec or by all.of the stockholders he is also entitled.to compensation now class.let us go to voluntary dissolution.where no creditors are affected okay.class.so the solution class than daniel.langjan my creditors affected.no sorry when no creditors are affected.you only file an.administrative application for.dissolution with the sec.take note of the voting requirements.majority vote of the board of directors.and at least two thirds by.the stockholders okay.okay the copy of the resolution.certified by majority of directors.and counter signed by and filed with sec.the sec must issue a certificate of the.solution because you remember.class that the only way by which a.corporation can be dissolved is with the.consent or approval of the state.which is why the law requires that a.corporation.must obtain a certificate of dissolution.from the sec.where creditors are affected you you.don't file administrative application.but you file a formal petition for.dissolution with the sec.we do not this and healing to the julie.to be.to the julie um to be duly conducted.okay now you have to furnish copies to.the creditors.of the corporation it must be signed by.majority of the board.cetera et cetera verified by the vice.president or secretary.or one director or trustee.so these are the requirements take note.and take.no okay.the order must be published once a week.for three consecutive weeks.now after five uh days notice or five.day notice from expired date.the sec will commence to hear the.petition.and objection if there is any.now if lawful it shall order corporation.dissolve provided for the dis.position of the properties and may.appoint a.receiver okay.you can also dissolve the corporation by.shortening its corporate.term now through the amendment of the.articles of incorporation by a vote of.two-thirds of the outstanding shares.okay.the notice of the solution must also be.published.uh for three consecutive weeks you have.to list down the corporate creditors.with.with their consent the shortening of the.corporate.term submission by majority stockholders.undertaking to personally answer for any.outstanding corporate obligations.of the corporation you have to submit.the latest.audited fs which must not be earlier.than the date of the stockholders.meeting.approving the amendment the articles of.incorporation.and a tax clearance from the bir.okay.involuntary dissolution a corporation.may be dissolved by the sec upon the.filing of a verified complaint.after prop proper notice and hearing on.the grounds provided by existing laws.rules and regulation okay by expiration.of the corporate term solution of the.sec on the grounds.under existing law you failed to.organize or commence business.within two years from incorporation or.you are continuously.inoperating for five years you failed to.file the bylaws within 30 days from the.date of issue once or the certificate of.incorporation.plus these are the grounds not by by.which the sec.can uh involuntarily dissolve the.corporation.okay fraud in pr procuring the.certificate.of registration continuance of business.not visible as planned by management.committee.order rehabilitation receiver serious.misrepresentations.and failure to file required reports.okay.okay take note we will discuss this in.detail appointment of management.receiver.rehabilitation receiver etc.we will discuss them in details later.but not.under corporation code okay a foreign.corporation class.is the one form exists and one form.organized and existing.under philippine laws okay a corporation.has legal status only within the state.or territory in which.it was organized for this reason a.corporation organized in another.country has no personality to file suits.in the philippines.in order to subject a foreign.corporation doing business in the.country.the jurisdiction of our courts it must.acquire a license from the sec.and appoint an agent for service.of process.so take note of these three class.tandano if.a foreign corporation cannot file a case.in the philippines.business in the philippines so if a.foreign corporation is doing business in.the philippines with a license.it can file and if it can file a case.and a case can be filed against it now.uh if the foreign corporation is doing.business.in the philippines without a license.from the sec.then it cannot file a case in the.philippine court but.it can be sued or a case can be filed.against it.in the philippines now if a foreign.corporation is not.doing business in the philippines no.or is doing a business.on an isolated transaction it can sue it.and.it may also be.so the doctrine of doing business and.resection 3d.of the foreign investment act of 1991..so this is these are the enumeration.of what is meant or what is the.definition of.a foreign corporation doing business in.the philippines.if you solicit orders if you enter into.service contracts if you have open.offices where they're called liaison.offices or branch.offices the appointment of.representatives.or distributors domiciled in the.philippines.or who in any calendar year stay in the.country for a period totaling 180 days.or more.no you will be considered as doing.business in the philippines.under the foreign investment act of 1991.okay participating in the management.supervision or control of any domestic.business.is also considered as doing business and.any other acts.that imply continuity of commercial.dealings or arrangements not etc.so these are the matters which are not.considered by the.foreign investment act of 1991 as doing.business in the philippines.mere investment now as a shareholder by.a foreign equity is not doing business.having a nominee director or officer a.c-class.not if you have um ownership of shares.then you can do what you can.nominate a director to represent its.interest in such corporation.and it will not amount to doing business.in the philippines.appointing a representative or.distributor domicide in the philippines.which transacts business in its own name.and for its own account.so the true test is that what there must.be continuity of commercial dealings and.arrangement.and that the act of or works exercise is.for the purpose.of the organization of the foreign.corporation.okay contract okay.as long as the contract is perfected.and that the services is consummated.outside.the philippines then it will not.constitute.doing business in the philippines even.if the products themselves.should be manufactured or processed in.the philippines by.locals okay.this ends our discussion on.the corporation code of the philippines.now so after this one we will discuss.the revised corporation code of the.philippines.okay thank you and have a nice day.

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Non Stock Corporations Form FAQs

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I received my late husband's W-9 form to fill out for what I believe were our stocks. How am I supposed to fill this out or am I even supposed to?

You do not sound as a person who handles intricasies of finances on daily basis, this is why you should redirect the qustion to your family’s tax professional who does hte filings for you. The form itself, W-9 form, is a form created and approved by the IRS, if that’s your only inquiry. Whether the form applies to you or to your husband’s estate - that’s something only a person familiar with the situation would tell you about; there is no generic answer to this.

What are the legal formalities for incorporation of NPO?

US perspective, for 501c3 non-profits: Choose the right entity - most NGOs/non-profits are either "not-for-profit" corporations", or "non-stock corporations." Prepare charter for the NGO according to the legal requirements of the state under whose laws you want the internal affairs of the NGO to be governed, as well as according to federal law requirements. File charter with the Secretary of State of the state chosen in 2. Prepare bylaws. Hold organizational meeting so that directors and whoever else required to do so under the charter and bylaws can ratify (i.e. accept) everything that has been done so far, and decide on other details such as who has the power to do what, who is part of the executive committee, etc. Put everything accepted and decided in writing. Fill out form 1023 or 1023-EZ, depending on what the NGO is eligible for. Be warned that 1023 can take 100hrs for first timers to complete. Submit 1023, and all supporting documents to the Internal Revenue Service (IRS). If the IRS calls to ask questions, answer them. IRS review can take somewhere between 3-12 months, depending on current load of applications and how well the application was done. Hopefully, after all that, receive a positive determination letter from the IRS. Congrats! The NGO is now legit! Register NGO in every state that requires registration (this is usually based on funds raised or to be raised in a particular state, and some states require registration before the fact while others only require registration after). [Non]Profit! I'm a lawyer, but not your lawyer. This is not legal advice, just general information, so depend on it at your own risk. The internet is a scary place, so don't believe every thing you read. If you need legal advice, hire a lawyer to be your lawyer =)

How do I find out whether I belong to the OBC creamy or non-creamy layer while filling out a form?

Please go to the caste census of 2011 to find out whether you are a backward caste . Then find out from the website of Backward Classes Commission whether you fall in OBC list . Having found that , the criteria is as under - You will be in non-creamy layer if your parents’ total annual income is not more than Rs.8 lakh . Your own income , if any , is not included . Any agricultural income of your parents is also not included .

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