Sec. 64.

Issuance of Stock Certificates

Partial payments –
deemed pro-rated FULL PAYMENT of
among all shares SUBSCRIPTION required
for issuance of
subscribed – no certificate of stock
certificate can be
issued

May be issued for less than the

number of shares subscribed
and the par value is paid
Liability of stockholders on unpaid subscription

Creditors may
enforce
Stock Corporation -
no power to release
Debtors of the
or without unanimous
corporation
consent of
stockholders

Depends upon the full Unpaid Unpaid Subscription -

discharge of asset creditor may
subscription contract Subscription look
Nature of relation of stockholder to the corporation

Relation based on Contract

Share not an indebtedness of
corporation
Stockholder Corporation
Corporation owns property distinct
entity
 Rights Stockholders
• Attend and vote in person/proxy @ stockholders meeting
• Elect and remove directors
• Approve certain corporate acts
• Adopt/amend or repeal by-laws
• Compel the calling of meetings when no person authorized to call
• Issuance of certificate of stock/ownership evidence
• Receive dividends when declared
• Participate in distribution of corporate assets upon dissolution
• Transfer of stock on the corporate books
• Pre-emption in the issue of shares
• Inspect corporate books/records and receive financial report
• Furnished the most recent FS upon request
• Bring individual/representative/derivative suits
• Recover stock unlawfully sold for delinquency
• Enter into a voting trust agreement
• Demand/withdraw payment of the value of his shares
• Have the corporation voluntary dissolved
 Action by
stockholders or
members

Lack of action on the Wrong or injury

part of officials of done directly against
corporation the corporation
 Derivative Suit - brought by one or more
stockholders or members in behalf of
corporation to redress wrong committed
against it, and protect corporate rights
Representative suit – whenever officials refuse to sue
group of stockholders
bring direct suits Individual Suit – action brought
by a stockholder against the
against a corporation in corporation for direct violation
the form of class action of his contractual rights
Sec. 65 Liability of directors for watered stocks -
SOLIDARY

Issued Issued as fully paid,

property/services, corporation received
Issued w/out
fair valuation is less lesser sum of money
consideration
than its par than its par

stock dividend –
no sufficient
retained
earnings/surplus

Watered Stock – issued for no value at

all/less than its equivalent
Effect of issue of Watered Stock

SEC

Creditors

Corporation –
illegal

Issue of
watered stock
Sec. 66. Interest on unpaid subscriptions

SUBSCRIBERS
Pay interest on Rate fixed in by-
all unpaid laws or
CORPORATION
subscriptions Legal rate -
from date of 6%/annum
subscription
Sec. 67 Payment of Balance of Subscription

Extra-
judicial
sale at
Remedies to enforce payment public
auction
Statutory sanctions on
stock delinquency

Rights denied to stockholders –

Holder not entitled to any rights of stockholders except right to dividends
No delinquent stock shall be voted/entitled to vote at any stockholders meeting

Right given to the corporation –

Corporation has the right to first apply cash dividends due on delinquent stock
to the unpaid balance of the subscription plus cost and expenses
As to stock dividends, withhold from the delinquent stockholder until his unpaid
subscription is fully paid
Payment of Unpaid Subscription
When to be made Effect of failure to pay Effect of Payment

a. Date specified in the Render the entire

contract of subscription
b. Date stated in the call
made by the board of
directors
balance due and payable Payment by delinquent
stockholder of his
Make all the stock unpaid subscription with
covered by said accrued interest, cost,
subscriptions delinquent and expenses shall be
and subject to sale at restored to all rights of
public auction stockholder
Stockholder liable for
interest at legal rate/
rate in by-laws
When stock becomes delinquent

Failure of the holder to pay

Subject to sale
the unpaid If there is no date stated,
at public
subscription/balance within from the date stated in the
auction unless
30 days from date specified call mad by BOD
BOD orders
in contract of subscription
Call and Assessment

Call – declaration officially made by a

corporation expressed in the form of a
resolution of BOD requiring the payment
of portion of a subscribers stock
subscription

Assessment – reference to both paid & unpaid

subscription
Paid – levy made upon stock of a corporation
for correcting impairment of capital
Unpaid – call or installment
Requisites for a Valid Call
Operate uniformly
upon all
Must be made by stockholders
BOD
Must be made in the
manner prescribed
by law

 BOD may make a call anytime

 Call made by subscribers is VOID
 Call is necessary when required by contract
 Notice MUST be given to the stockholder
 When Corporation insolvent – payment of stock subscription may be
enforced without a prior call
Sec. 68. Delinquency Sale
Secretary gives notice to
stockholders. If not paid
within 30 days from the
date in contact/call stocks
becomes delinquent and be
subject to sale
Sold at public auction to the
highest bidder for cash
BOD, by resolution orders the
sale of delinquent stocks stating
the amount due, date, time , &
place of sale with notice to
delinquent stockholders

BOD passes a resolution

declaring payable the whole or
certain percentage of unpaid
subscriptions
Highest Bidder – person offering
at the sale to pay the full amount
of the balance on the
subscription with accrued
interest, cost of advertisement
and expenses of sale

Highest bid must not be less

than the full amount due

In the absence of bidders,

corporation may purchase for
itself the delinquent stock.
Delinquent subscriber released
from liability & his subscription is
fully paid
Sec. 69. When sale may be questioned

Irregularity or
defect in the No action
notice of sale maintained
Irregularity or unless it is
defect in the sale commenced by
itself of the the filing of
delinquent stock complaint within
6 months from
the date of sale
Sec. 70. Court action to recover unpaid subscription

from collecting by
action in a court of
proper jurisdiction
Sec. 71. Effect of delinquency

No delinquent stock
be voted for or
entitled to vote @
stockholders
Holder meeting
not entitled to
any of the rights Unless he pays the
of stockholder amount due in his
except right to subscription with accrued
dividends interest, costs, and
expenses of
advertisement
Sec. 72. Rights of unpaid shares

Holder not
Before unpaid Has all the
considered violated
shares become rights of a
any contract with
delinquent stockholders
the corporation
Sec. 73. Lost or destroyed certificates
• The registered owner of the certificate of
stock/legal representative shall file affidavit in
triplicate setting forth how the certificate lost,
1st step stolen or destroyed, the # of shares
represented, the serial # & the name of the
corporation which issued. He shall also submit
other info. & evidence which is necessary

• After verifying the affidavit & other info. &

evidence with the books of corporation, said
corporation shall publish a notice in a
2nd step newspaper published in principal place of
corporation ONCE A WEEK for 3 consecutive
weeks @ the expense of the registered owner
Notice

Notice shall state the name of said corporation &

registered owner, serial # & # of shares represented in
the certificate, & that after the expiration of 1 year from
the date of last publication,

If no contest has been presented to the

corporation, the right to make contest
shall be BARRED & said corporation shall
cancel in its books the certificate which
has been lost & issue new certificate
unless the owner files bond or other
security as required effective for a
period of 1 year