1)

Abandonment of Office A situation when an officer abandons his office to the detriment of the corporation even before the acceptance of his resignation.

2)

Affiliated It means closely associated with another typically in a dependent or subordinate position.

3)

Amotion It is the power to remove directors, officers and trustees prior to the expiration of their term.

4)

Appraisal Right It is the right given to a dissenting stockholder to demand payment of the fair value of his shares in the following cases: a) Any amendment to the articles b) In case of sale, lease, exchange, transfer, mortgage, pledge, or other disposition of all or substantially all of the corporate property c) In case of merger or consolidation d) In case of investment of funds by the corporation in another corporation

5)

Articles of Incorporation It is a document signed by the incorporators which is required to be submitted prior to incorporation to the Securities and Exchange Commission by which its issuance a corporation acquires juridical personality.

6)

Authorized Capital Stock Is synonymous with capital stock where shares of the corporation have par value. It is the total amount in the charter which may be raised by the corporations for its operations.

7)

Best Efforts An agreement in which an underwriter promises to make a fullfledged attempt to sell as much of an initial public offering as possible to the

public. Best effort agreements are used mainly for securities with higher risk, such as unseasoned offerings, or in less-than-ideal market conditions. 8) Bond Dividend These are dividends distributed in bonds of the corporation to stockholders. 9) Bonus Stock A type of share which is issued to persons who subscribe for bonds of a corporation under the condition that they shall receive an equal amount of stock, therewith the money paid on the subscription is payment for the bonds alone. 10) 11) Book Value It is the companys assets minus the liabilities. By-laws May be defined as the rules of action adopted by the corporation for its internal regulations and for the government of its officers and of its stockholders or members. 12) 13) Call An option that gives the holder the right to buy the underlying asset. Capital The term is used to indicate the entire property or assets of the corporation. It includes the amount invested by the stockholders plus the undistributed earnings less losses and expenses. It also refers to that portion of the net assets paid by the stockholders as consideration for the shares issued to them. 14) 15) Cash Dividend These are dividends payable in cash. Certificate of Incorporation It is document issued by the Securities and Exchange Commission which grants a corporation its juridical personality.

16) 17)

Close Corporation A corporation limited to selected persons or members of a family. Collateral Attack of Corporate Existence This refers to a legal action made to challenge a ruling or a judgment in another case regarding the existence or juridical personality of the corporation.

18)

Common Stock A type of stock which entitles the holder to pro rata division of the profits, if there are any, without any preference or advantage in that respect over other stockholders or class of stockholders.

19)

Composite Dividend These are dividends which are partly in cash and partly in stocks.

20)

Comptroller The chief financial officer of any private organization, an officer who conducts the fiscal affairs of the corporation.

21)

Concession Theory This theory states that a corporation is an artificial being without any existence until it has received imprimatur of the state acting according to law through the Securities and Exchange Commission.

22)

Conditions Precedent These are conditions non-compliance with will prevent the legal existence of the corporation.

23)

Conditions Subsequent These are conditions to be complied with acquiring corporate existence in order that a corporate may legally continue as such.

24)

Consolidation This is process where two or more corporations may consolidate into a new single corporation which shall be the consolidated corporation.

25)

Control Test A test which considers the nationality of the corporation as having the nationality of the controlling stockholders.

26)

Convertible Stock A type of stock which is convertible or changeable by the stockholder from one class to another class, such as from preferred to common, at the conversion ratio, i.e., the price at which the common is to be valued against the preferred.

27)

Corporate charter This refers to a corporations Articles of Incorporation which is a written document filed with the Security and Exchange Commission by the incorporators detailing the major components of a company. It is another term for articles of incorporation.

28)

Corporate Deadlock A dispute in the management of the corporation where a decision cannot be reached by majority vote of the board of directors or stockholders. The SEC can arbitrate the deadlock.

29)

Corporate Opportunity Theory This doctrine provides that the effect when a director attempts to acquire or acquires in violation of his duty any interest adverse to the corporation in respect of any matter which has been reposed in him in confidence or when by virtue of his office he acquires for himself a business opportunity which should belong to the corporation, he must account for all such profits derived by him from the said business opportunity by refunding the profits to the corporation.

30)

Corporate Seal It is an official seal used by the corporation as verification of authenticity in its papers and documents.

31)

Corporation It 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 incident to its existence.

32)

Corporation Aggregate A corporation consisting of more than one members or corporators.

33)

Corporation by Estoppel A corporation which in reality is not a corporation, either de jure or de facto, because it is so defectively formed, but is considered as a corporation in relation to those only who, by reasons of their acts or admissions, are precluded from asserting that it is not a corporation.

34)

Corporation by Prescription A corporation which has exercised corporate powers for an indefinite period without interference on the part of the sovereign power and which, by fiction of law, is given the status of a corporation.

35)

Corporation Sole A religious corporation which consists of one member or corporator only and his successors.

36)

Corporator Those who compose the corporation whether stockholders or members.

37)

Coupon Bond These are bonds which are payable to the bearer and are provided with interest warrants for each installment of interest.

38) 39)

Cumulative The increase of a value or amount by successive additions. Cumulative Dividend These are dividends distributed to stockholders of cumulative preference shares.

40)

Cumulative shares A type of stock which entitles the holder, before any dividends are paid to the holders of the common stock, to a dividend measured not only by the contract amount for the current dividend period, but also by any deficiency or arrearages in the payment of dividends accrued in former dividend periods.

41) 42)

De Facto Corporation A corporation that exists in fact but not in law. De Facto Doctrine This doctrine provides that the due incorporation of any corporation claim in good faith to be a corporation and its right to exercise corporate powers shall not be inquired into collaterally in any private; however, such inquiry may be made by the State in a quo warranto proceeding because it is the States right and authority which are invaded and usurped.

43) 44)

De Jure Corporation A corporation that exists in fact and in law. Derivative Suit It is a suit filed by stockholder in the name and in behalf of the corporation to protect rights or redress wrongs committed against the corporation whenever the corporate officers refuse to bring such actions or such officers are the ones to be sued or held liable.

45)

Direct Attack An attack on a judgment made in a proceeding (as an appeal) brought for the specific purpose of having the judgment corrected or overturned.

46)

Direct Attack of Corporate Existence This refers to legal action made to directly challenge a ruling or a judgment regarding the corporates existence or juridical personality.

47)

Discretionary Dividend Type These are dividends declared and paid depending on the discretion of the directors.

48)

Dissolution Dissolution of a corporation is the termination of its existence as a body politic.

49)

Dividend It is that part or portion of the profits of a corporation set aside, declared, and ordered by the directors to be paid ratably to the stockholders on demand or at a fixed time.

50)

Doctrine of Constructive Notice This doctrine provides that people are presumed to have a notice about something even though actual notice hasnt exist

51)

Doctrine of Corporate Fiction This doctrine provides that a corporation is a legal or juridical person with a personality separate and distinct from its individual members or stockholders.

52)

Doctrine of Equality of Shares This doctrine provides that when the articles of incorporation do not provide for any distinctions of the shares of stock, all shares issued by the corporation are presumed to be equal, enjoy the same rights and privileges, and are also subject to the same liabilities.

53)

Doctrine of General Capacities This doctrine provides that the corporation has the same powers as that of a natural person.

54)

Doctrine of Interlocking Directors This doctrine provides that a contract between two or more corporations which have interlocking directors is valid if there is no fraud and the contract is fair and reasonable under the circumstances.

55)

Doctrine of Legal Entity The doctrine provides that a corporation is a legal entity or a person in law, distinct from the persons composing it, is a legal theory introduced for the purposes of convenience and to promote the ends of justice. This fiction cannot be extended to a point not within its reason and purposes.

56)

Doctrine of Limited or Special Capacities This doctrine provides that a corporation, being a mere creation of law, may exercise only such powers as granted by the law of its creation. An express grant is not necessary. All powers which may be implied from those expressly provided by law and those which are incidental or essential to the corporations existence may also be exercised.

57)

Doctrine of Piercing the Veil of Corporate Fiction This doctrine provides that the separate personality of a corporation may be disregarded if such is used to defeat public convenience, justify wrong, protect fraud or defend crime such as when it is used to evade the faithful compliance of obligations under a contract or for the benefit of a single person who controls the corporation or to evade taxes.

58)

Domestic Corporation A corporation incorporated under the laws of the Philippines.

59) 60)

Ecclesiastical Corporation A corporation organized for religious purposes. Educational Corporation A corporation which is either a stock or non-stock corporation organized to provide facilities for teaching or instruction.

61)

Eleemosynary Corporation A corporation which is established for charitable purposes.

62)

English Type an underwriters agreement to guarantee the sale of an issue by agreement to buy from the issuing party any unsold portion at a stated price.

63)

Executive Committee It is a small group within a corporation composed of not less than 3 members of the Board of Directors. Its creation is provided in the by-laws. Its purpose is to take immediate action on important matters without the need of board meeting, particularly when it is difficult to muster a quorum.

64) 65)

Express These are powers expressly granted to a corporation by its charter. First Commitment An underwriter's agreement to assume all inventory risk and purchase all securities directly from the issuer for sale to the public at the price specified.

66)

Flag Law An act to prohibit the display of flags, banners, emblems, or devices used in the Philippine islands for the purpose of rebellion or insurrection against the authorities of the United States and the display of Katipunan flags, banners, emblems, or devices and for other purposes (RA 1696).

67)

Foreign Corporation A corporation formed, organized existing under any laws other than those of the Philippines.

68)

Founders Shares It is a share given certain rights and privileges like the exclusive right to vote and be voted for in the election of directors. It is for a limited period not to exceed five (5) years, subject to the approval of the Securities and Exchange Commission.

69) 70)

Fractional Shares It a share with a value of less than one full share. Genossenchaft Theory This theory states that the corporate entity is a reality of the group as a social and legal entity independent of state recognition and concession.

71)

Government-owned or Controlled Corporations A corporation directly created by special law, or if organized under the general corporation law, are owned and controlled by the government directly through a parent corporation or subsidiary.

72)

Grandfather Rule It is a method by which the percentage of Filipino equity in corporations engaged in nationalized and/or partly nationalized areas of activities, provided for the Constitution and other nationalization laws is accurately computed, and the diminution of said equity prevented.

73)

Guaranteed Preferred It is a type of share on which the payment of the dividend is guaranteed.

74)

Highest Bidder Is a person who offers to pay the full amount of the subscription, accrued interest, and cost of the advertisement and expenses of sale for the smallest number of shares.

75)

Holdover Principle It states that incumbent directors do not automatically cease to hold office upon the expiration of their term if they have no successors yet.

76)

Implied This refers to the things that are presumed to have been the intention in the grant given to someone.

77)

Implied Powers These are the powers which are necessary to carry into effect powers which are expressly granted, and which must therefore be presumed to have been the intention in the grant of the enterprise.

78)

Incidental Powers Those that are attached to the corporation at the moment of its creation and may be said to be inherent in it as a legal entity. Inherent powers are incident to corporate existence and are not derived from express powers but from the very existence of the corporation as being inherent as a legal entity.

79)

Incorporation The process of legally declaring a corporate entity as separate from its owners. It includes the drafting of the articles of incorporation and the filing of the same together with the treasurers affidavit, statement of assets and liabilities, certificate of bond deposit, certificate as to name of the corporation, and certificate of authority from monetary board in case of banking corporation to the Securities and Exchange commission. It also includes payment of the filing and publication fees and ends with the issuance by the SEC of the certificate of incorporation.

80)

Incorporation Rule As a general rule, a corporation is a citizen of the state or country by or under the laws of which it was created and exists without regards to the citizenship of its stockholders or members.

81)

Incorporation Test The nationality of the corporation follows that of the country under whose law it was incorporated.

82)

Incorporators Those persons originally forming and composing the corporation whose names appear in the articles of incorporation and are signatories thereof.

83)

Individual Suit It is an action brought by a stockholder against the corporation for direct violation of his contractual rights as such individual stockholder.

84)

Interlocking Directors These are directors of a corporation that are also directors of another corporation.

85) 86)

Intra-Vires Acts Acts within the legitimate powers of the corporation. Investment Test Considers for purposes of investment a corporation to be Filipino if 60% of its capital stock outstanding and entitled to vote is owned or held by citizens of the Philippines.

87)

Lay Corporation A corporation organized by laymen for a purpose other than for religion.

88)

Lease of Assets A common form of corporate combination where a corporation leases its property to another corporation for which the lessor merely receives rental paid by the lessee.

89) 90)

Legal Capital It refers to the total par value of all issued par value shares, or the total consideration received for all issued no par value shares. Liquidating dividend Distributions of the assets of the corporation upon dissolution or winding up of the same.

91)

Liquidation It is the winding up of the affairs of the corporation by reducing its assets in money, settling with creditors and debtors, and apportioning the amount of profit and losses.

92)

Management Contract An agreement by which a company will provide its organizational and management expertise in the form of services to another company.

93) 94)

Mandatory It means required, or obligatory, one which must be obeyed. Market Value It is the current quoted price at which investors buy or sell a share of common stock or a bond at a given time.

95) 96)

Members They refer to the corporators of a non-stock corporation. Merger The union effected by the absorbing of one or more existing corporation by another which survives and continues the combined business.

97)

Migratory Corporation A corporation organized under the laws of a state other than of the incorporators residence for the purpose of doing all or greater part of their business in the state of their residence or in another state than that of incorporation.

98)

Municipal Corporation An incorporated political subdivision of a state that is composed of the citizens of a designated geographic area and which performs certain state functions on a local level and possesses such powers as are conferred upon it by the state.

99)

No-par Value Shares A class of shares without nominal or par value.

100) Non-participating A type of stock which entitles the holder to receive no more than the stipulated dividend. 101) Non-stock Corporation A corporation that does not issue stock and are created not for profit but for the public good and welfare. 102) Open Corporation A corporation which is open to any person who may wish to become a stockholder or member thereto. 103) Optional Dividend These are dividends which gives the stockholder an option to receive cash or stock dividend 104) Outstanding Capital Stock The total shares of stock issued to subscribers or stockholders, whether or not fully or partially paid (as long as there is a binding subscription agreement), except treasury shares. 105) Par value Stock A class of stock with a stated value appearing on the face of the certificate of stock. 106) Parent Corporation a.k.a. holding corporation; A corporation which is so related to another corporation that it has the power either directly or indirectly, to elect the majority of the directors of such other corporation. 107) Participating Stock A type of share which, after the stipulated dividend has been paid on the common stock as well as on the preferred, any surplus is to be paid upon all without distinction. 108) Power of Succession The Corporation has a continuity of existence independent of that of its members or shareholders. It shall continue to exist for

the period stated in the articles of incorporation. The corporate life shall continue until the term expires or unless sooner dissolved for other causes or its term extended in accordance with law. 109) Pre-emptive Right The right of existing stockholders to purchase or subscribe to new issuances or dispositions of shares, in proportion to their respective stockholdings, before such shares are offered to the public. 110) Preferred Dividend These are dividends distributed to preferred

stockholders. 111) Preferred Stock A type of stock that enjoys preferences over other stocks such as with respect to dividends and the distribution of assets upon liquidation. 112) Primary Franchise a.k.a. Corporate Franchise; The right and privilege granted by the state of being a corporation, this is the privilege granted to the persons to form a corporation. It cannot be sold or assigned. 113) Private Corporation A corporation formed for some private purpose, benefit, or end; it may either be a stock or non-stock corporation, government-owned or quasi-public corporation. 114) Promotion It is a business term used for summing up in a single word a number of business operations familiar to the commercial world by which a company is generally brought into existence. 115) Promotion Shares A type of stock issued to promoters, or those in some way, interested in the company, for incorporating the company, or for services rendered in launching or promoting the welfare of the company, such as advancing the fees for incorporating, advertising, attorneys fees, surveying, etc.

116) Provisional director A provisional director is 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, is determined by the SEC. He may have all the powers of a director and can be removed by the order of SEC or by all the stockholders. It is a means of settling deadlock dispute in the management of a close corporation. 117) Proxy It refers to the authority given by a stockholder to another person to vote the shares and which is generally effective only for a particular meeting. 118) Public Corporation A corporation formed or organized for the government of a portion of the state, the officers are appointed by the state and are subject to removal by the state 119) Public Service Corporation A corporation which accepted from the State the grant of a franchise or contract involving the retention or performances of some public duties or service, but which is organized for profit. It is also known as the public utilities or Quasi-public Corporation. 120) Quasi Corporation These are public bodies which are not corporations in the full sense but only resemble them in that they have some of the attributes of a corporation and which are created or authorized by the legislature as public agencies to aid the state in or take charge of some public or state work other than community government for general welfare. 121) Quasi-public Corporations These are private corporations which have accepted from the state the grant of a franchise or contract involving the performance of public duties. 122) Quo Warranto Proceeding It is a legal proceeding during which an individual's right to hold an office or governmental privilege is challenged.

123) Quorum It means a majority of an entire body like the required quorum in the meeting of the board of directors, which is generally the majority of the board of directors, unless otherwise stipulated in the bylaws. 124) Redeemable Shares A type of share which may be redeemed at a fixed date or at the option of the corporation or the stockholder or both at a certain redemption price 125) Religious Societies These are societies created to secure the public worship of God. 126) Representative Suit When a wrong is committed against a group of shareholders, any of them may bring an action in behalf of himself and all other shareholders who are similarly situated. This action is called representative suit. 127) Retained Earnings It represents the corporations accumulated profits or losses, including prior period adjustments less the dividends declared and other amounts transferred to the contributed capital accounts. Its unrestricted portion is where the dividends to be distributed by the stockholders are acquired. It is the difference between the total present value of its assets, after deducting losses and liabilities, and the amount of its outstanding capital stock. 128) Right of Appraisal It is the right given to a dissenting stockholder to demand payment of the fair value of his share in some cases like the amendment to the articles; sale, lease, exchange, transfer, mortgage, pledge, or other disposition of all or substantially all of the corporate entity; merger or consolidation; and investment of funds by the corporation in another corporation.

129) Right of Unpaid Shares Holders of shares not fully paid which are not delinquent shall have all the rights of stockholders except the right to a certificate. 130) Sale of Assets It is a form of corporate combination that may be brought about by the sale of the entire assets by one corporation to another in exchange for the shares of stock of the purchasing company. 131) Sale of Stock Selling of stocks to old stockholders or prospective stockholders. 132) Scrip Dividend A written certificate issued to a stockholder entitling him to the payment of money because at the time of declaration there was no cash. 133) Secondary Franchise It is the right granted to the corporation to exercise its powers. It can be sold or assigned if sale is ordered and confirmed by the court. 134) Self-dealing Directors Directors which entered into a contract with their own corporation. The contract is generally voidable. 135) Share in Escrow A type of share subject to an agreement under which the shares are deposited by the grantor or his agent with a third person, to be delivered by the depositary to the grantee (buyer) or subscriber upon the happening of certain suspensive condition. 136) Share of Stock It is one of the units into which the capital stock is divided and represents the intangible interest which an owner has in the management, profits, and assets of the corporation. 137) Stock Certificate The document which evidences the interest of a stockholder in a corporation and its property.

138) Stock Corporation The ordinary business corporation and operated for the purpose of making a profit which may be distributed in the form of dividends to stockholders. Those which have a capital stock divided into shares and are authorized to distribute to the holders of such shares dividends or allotments of the surplus profits on the basis of the shares held. 139) Stock Dividend These are dividends payable with unissued or increased or additional shares of the corporation instead of in cash or in property. The declaration involves the issuance of new shares to be distributed pro rata to stockholders and requires the vote of the majority of the board of directors and the ratification of the stockholders. 140) Stockholders Refer to owners of shares in a stock corporation. 141) Street Certificate A certificate showing ownership of a specified number of shares of stock; endorsed by the owner and guaranteed by a broker, it may be traded without formal transfer on the books of the corporation issuing the stock. 142) Subscribed Capital Stock It is the amount of the capital stock which is subscribed, whether fully paid or not. 143) Subscription A contract for the acquisition of unissued shares in an existing corporation or a corporation still to be formed. 144) Subsidiary Corporation A corporation on which is so related to another that a majority of its directors can be elected directly or indirectly by such other corporation. 145) Theory of Corporate Enterprise The firm is considered to be a social institution operated for the benefit of many interested groups.

146) Theory

of Corporate Ratification

The

Corporation,

through

the

stockholders, may ratify and enforce some voidable contracts entered into by the directors outside the scope of their authority. 147) Tramp Corporation A corporation chartered in one state without the intention of doing business therein but to carry on their business and operations wholly in other states. 148) Treasury Shares These are shares that have been issued and fully paid for, but subsequently reacquired by the issuing corporation by purchase, redemption, donation, or through some other lawful means. 149) True Corporation A corporation which exists by statutory requirements. 150) Trust Fund Doctrine The capital stock, property and other assets of the corporation are regarded as equity in trust for the payment of corporate creditors. The subscribed capital stock of the corporation is a trust fund for the payment of debts of the corporation which the creditors have a right to look up to satisfy their credits. 151) Ultra Vires Acts of Corporations It is an act not within the express, implied, and incidental powers of the corporation. It is an act which is impliedly forbidden, because it is not expressly or impliedly authorized. 152) Underwriter A person who agrees to take corporate shares in case the public will not under an agreement made before corporate shares are brought before the public. 153) Voting trust agreement It is a trust created by an agreement between a group of stockholders of a corporation and the trustee or by a group of identical agreements between individual stockholders and a common trustee, whereby it

is provided that for a term of years, or for a period contingent upon a certain event, or until the agreement is terminated, control over the stock owned by such stockholders, either for certain purposes or for all, shall be lodged in the trustee, either with or without a reservation to the owners, or persons designated by them, with the powers to direct how such control shall be used. 154) Watered stock are those issued not in exchange for its equivalent either in cash, property, share, stock dividends, or services; thus the issuance of such stocks are prohibited.