The derivative suit is not proper. The parties-in- interest are not the petitioners as stockholders, who were members of the 2003- 2004 Board of Directors of FLP Corporation. The cause of action devolves on the petitioners, not on FLP Corporation, which did not have the right to vote. Hence, the complaint filed by A, B, C, D and E is a direct action by the petitioners, who were the members of the Board of Directors of the corporation before the election, against respondents, who are the newly elected Board of Directors. Under the circumstances, the derivative suit filed by petitioners in behalf of FLP is improper.
NO. In a similar case Gokongwei vs. SEC, it was held that a corporation is authorized to prescribe the qualifications of its directors. A provision in the by-laws of the corporation that no person shall qualify or be eligible for nomination for elections to the BOD if he is engaged in any business which competes with that of the Corporation is valid. A director stands in a competition from being elected to the board of directors is a reasonable exercise of corporate authority. Sound principles of corporate management counsel against sharing sensitive information with a director whose fiduciary duty to loyalty may well require that he discloses this information to a competitive rival. In the case at bar, the petition of Y is not tenable because he has no vested right to be elected as a director. When a person buys stock in a corporation he does so with the knowledge that its affairs are dominated by a majority of the stockholders. Such amendment made in the by-laws is valid.
NO. I would not allow the majority stockholders to remove the director. While the stockholders may, by a 2/3 vote, remove a director, the law also provides, however, that this right may not, without just cause, be exercised so as to deprive the minority of representation in the board of directors.
Henry cannot be removed by his fellow directors. The power to remove belongs to the stockholders. He can only be removed by the stockholders representing at least 2/3 of the outstanding capital stock in a meeting called for that purpose. The removal may be with or without cause except that in this case, the removal has to be with cause because it is intended to deprive minority stockholders of the right of representation. Amotion is the premature ousting of a director or officer from his post in the corporation.
YES, the stockholder has a valid and legal ground to object to the payment to the directors of a bonus equivalent to 15% of the company’s net income. The law provides that the total annual compensation of directors, in the preceding year, cannot exceed 10% of the company’s net income before income tax.
The action of the Board is not legal. The rights and liabilities of X as the Mine Superintendent (or as an Officer) are apart from his rights and liabilities arising from being likewise a stockholder. In general, in order that directors and officers may be held personally accountable they must have voted or assented to a patently illegal act, or are guilty of bad faith or gross negligence, or are in conflict of interest with the corporation. A mere technical error committed by X in the design of an equipment used by the company, absent fault or negligence, would not warrant liability on his part even as an employee.
I would decide in favor of Mr. De Dios. ABC, Inc., is engaged in raising and selling hogs in the local market. The company that Mr. De Dios had set up was to engage, as it did, in the export of pig skins. There is thus no conflict of interest situation under the law.
The trial court erred in holding Dick, President and General Manager of Turtle, jointly and severally liable with TURTLE.
In issuing the check issued to SHAMRON and, thereafter, stopping payment thereof, Seldon was acting in his capacity as an officer of TURTLE. He was not acting in his personal capacity. Furthermore, no facts have been provided which would indicate that the action of Seldon was dictated by an intent to defraud SHAMRON by himself or in collusion with TURTLE. Having acted in what he considered as his duty as an officer of the corporation, Seldon should not be held personally liable.
A corporate director, trustee or officer be held personally liable with the corporation under the following circumstances:
1. When he assents to a patently unlawful act of the corporation;
2. When he acts in bad faith or with gross negligence in directing the affairs of the corporation, or in conflict with the interest of the corporation, its stockholders or other persons;
3. When he consents to the issuance of watered stocks or who, having knowledge thereof, does not forthwith file with the corporate secretary his written objection thereto;
4. When he agrees to hold himself personally and solidarily liable with the corporation; or
5. When he is made, by specific provision of law, to personally answer for the corporate action.
