ARTICLE 43

POWER TO DECLARE DIVIDENDS

ARTICLE 44
POWER TO ENTER INTO
MANAGEMENT CONTRACT

Renato T. Asi Jr.

Gabrielle O. Bantegui
 DIVIDENDS DIVIDENDS
RETENTION OF SURPLUS
PROFITS REPORT TO SEC

Section 43 prohibits stock corporations from Any declaration of dividends, whether

retaining surplus profits in stock of 100% of their
paid-up capital stock, except in the following cash or stock, shall be reported
situations within 15 days from the date of
 When justified by definite corporate expansion declaration. Corporations whose
projects or programs approved by the Board of
Directors;
shares or securities are listed in the
 When the corporation is prohibited under any stock exchange or registered &
loan agreement with any financial institution or licensed under SRC, the report shall be
creditor, whether local or foreign, from declaring filed to the SEC before or
dividends without its/his consent and such
consent has not yet been secured; simultaneously with the release or
 When it can be clearly shown that shown that publication of the notice of the
such retention is necessary under special declaration dividends to stockholders.
circumstances obtaining in the corporation, such
as when there is need for special reserve for
probable contingencies.
 DIVIDENDS
RESTRICTIONS ON BANKS
Under Sec.57 the General Banking Law 2000, no
bank for quasi-bank shall declare greater than its
accumulated net profits then on hand deducting
there from its losses and bad debts. Neither shall
the bank or quasi- bank declare dividends
 Clearing account with the BSP is overdrawn
 Deficient in the required liquidity floor for
government deposits for 5 or more consecutive
days;
 Does not comply with the liquidity
standards/ratios prescribed by the BSP for
purposes of determining funds available for
dividends declaration
 Committed a major violation as may be
determined by the BSP
ARTICLE 44
POWER TO ENTER INTO
MANAGEMENT CONTRACT
No corporations shall include a
management contract with another
corporation, unless such contract shall have
been approved by the Board of Directors
and by stockholders owning at least the
majority of the outstanding capital stock,
or by at least a majority of the members in
the case of a non-stock corporation, of
both the managing and the managed
corporations, at a meeting duly called for
the purpose.
No management contract shall be entered
into for a period longer than 5 yrs for any
one term
TICLE 44: POWER TO ENTER INTO MANAGEMENT CONTRACT
COVERAGE OF MANAGEMENT
CONTRACT
Does not cover every contract
denominated as “Management
Contract”. The rules apply only to every
contract whereby a corporation
undertakes to manage or operate all or
substantially all of the business of
another corporation, whether such
contracts are called service contracts,
operating agreements or otherwise.
However, such service contracts or
operating agrements whch re
ARTICLE 44: POWER TO ENTER INTO MANAGEMENT
RATIFICATION REQUIREMENTS
CONTRACT WHEN
THERE IS COMMON CONTROL OF
INVOLVED CORPORATIONS
 A stockholder/s representing the same
interest of both the managing and the
managed corporations own or control
more than 1/3 of the total
outstanding capital stock entitled to
vote o the managing corporations
 A majority of the members of the
Board of Directors of the managing
corporations also constitute a majority
of the members of the Board of
Directors of the managed corporation
TICLE 44: POWER TO ENTER INTO MANAGEMENT CONTRACT

RATIONALE FOR RATIFICATION

REQUIREMENTS

2. On Part of Managing
Corporation
1. On Part of the Managed
Corporation