MANILA, Philippines — Antonio Viray, former general counsel, corporate secretary and director of Metrobank, has launched a new book titled “Close Corporations.”
The book is a useful guide for lawyers and businessmen as it explains the difference between a “close” corporation, which is composed of no more than 20 stockholders, and an “open”corporation, which is made up of more than 20 stockholders.
According to the book, the stocks of a close corporation may be subject to certain “stock transfer restrictions” stipulated in the articles of incorporation like: limitation of stock ownership to fourth degree relatives by consanguinity of the incorporators; right of first refusal of existing stockholders in case another stockholder would like to sell his shares; and right of the corporation or stockholders to reacquire shares garnished or levied by a creditor.
Management wise, the stockholders of a close corporation may dispense with the election of a board of directors and constitute themselves as the board of directors to what may be called the “stock board,” it said.
Without a board, the stockholders themselves may appoint the officers of the corporation.
Operationally, the board of directors, if constituted, can pass resolutions without actual meeting and approve resolutions through what is known as “Action Without Meeting” or “Resolution In Lieu of Meeting.” This is apart, or in addition to, resolutions adopted through virtual meetings.
A close corporation may be the ideal corporate vehicle for small or family corporations and micro small medium enterprises.
Viray is also the corporate secretary of GT Capital Holdings Inc.