'Mergers' and ‘consolidations’.

Title

Language

English

Source

Business Day Volume XIV (No. 132) August 29, 1980

Year

1980

Subject

Business.

Commercial law.

Rights

In Copyright - Educational Use Permitted

Fulltext

Page 2 Business Day Friday, August 29, 1980 UN special session on world economy Rich, poor nations buckle down to work ‘Mergers’ and ‘consolidations’ agenda of the proposed global economic negotia tions. And it will try to bridge differences over major points of an inter national development strategy that would lay down objectives for Third World economic and social development over the next ten years. __ ______ „ ___ The committee’s' Tuesday, three days beYugoslav and Pakistani fore the scheduled final vice-presidents, Bogdan sitting. Crobrja and Niaz Naik, will chair two working groups dealing respective ly with the global ne gotiations and the dev elopment strategy. Dupuy told AFP the three groups would press ahead with their work in a bid to report back to the assembly by next UNITED NATIONS, New York, Aug. 28 (AFP) — The special session of the UN Gen eral Assembly will today tackle in earnest the tricky task of reconciling the views of rich and poor countries on how to conduct their dialogue on the future of the world economy. African and Asian de legates stressed last night that speeches by minis ters of leading western countries since the open ing of the session last Monday left little doubt that there is still a wide gap between the posi tions of the two sides. “The industrial coun tries are only prepared to negotiate when they are under pressure,” a Third World official said, in al lusion to the recent easing of the world oil market situation. However, foreign min isters of the European Economic Community at a formal EEC Council session on Wednesday “confirmed the Commu nity’s resolve to play an active part”, in the talks, an EEC handout said. It said the ministers “reiterated their political will to do their utmost to ensure that the negotia tions reach a successful conclusion that will con tribute to the revival of the world economy and the restructuring of inter national economic re lations on a more just and equitable basis.” The reaffirmation of <4keEEC’a“political will” was seen as an encourag ing sign in some Third World quarters here. But one official remarked that it remained to be seen what practical ef fects this would have. African and Asian de legates have said private ly that they expect the EEC to be more forth coming than the United States or Japan, whose position they described as “ambiguous.” Com menting on Monday’s speech by US Secretary of State Edmund Muskie, a North African diplomat said: “You can read it which way you want — they are in an electoral campaign.” AD HOC COMMITTEE. While ministers of the 153 UN member-coun tries are continuing their general debate — a speech-reading marathon — an ad hoc committee chaired by Michel Dupuy of Canada, one of the an chormen of the 1975-77 Paris North-South dia logue, will get down to brass tacks this morning. The committee will seek to break the dead lock between industrial and developing countries on the procedure and By MAT DEFENSOR amended by the board of directors but must be ratified by the stock holders or members by the same vote requirement. Once the plan is approved, art icles of merger or consolidation are executed by each of the constituent corporations, containing statement of the plan, the number of shares outstanding (or the members if non-stock) of each constituent corporation, and the number of votes for or against the plan. The articles are then submitted to the SEC for approval. If it ap proves, the SEC issues a certificate of merger or consolidation. In case the SEC believes that the proposed merger or consolidation is contrary to existing laws, it schedules a hear ing for the constituent corporations to present their side. The require ment of 25% sub scription to the authorized capital stock and 25% paidup to the subscription is < the first to be implemented by the Securities and Exchange Commis sion among provisions of the Corp oration Code. The old Corporation Law, Act No. 1459, required 20% subscription of which 25% was to be paidup. According to the report in the Business Day's Aug. 27 issue, the commission will formulate guide lines on mergers and consolidations of corporations. The new law con tains express provisions on mergers and consolidations, which were ab sent in the Corpor ation Law. The pro visions on mergers under the old law re ferred only to railway corporations and to public service corp orations. Unlike the new law, it outlined no procedures. For mergers and consolidation to be effected .under the old law, corporations have to go through the circuitous provisions of Sections 28-1/2, 17-1/2 and 18 and follow the procedure set by the Supreme Court in the case of Reyes V. Blouse, GR L4420, May 19,1952. While the words “merger” and “consolidation” are used inter changeably, they are not~one and the same. In a merger, a corpora tion is extinguished and absorbed by the other that remains in exist ence. In a consolidation, both the original corporations cease to exist and a new one is created. In both cases, the parties are called “constituent corporations.” Under the new law, corporations have the express powers to merge and consolidate. An entire new title covering five sections is devoted to the subject. In brief, the procedure to be fol lowed in merging of corporations is as follows: The board of directors of each corporation which decide to merge or consolidate formulates and approves a plan of merger or consolidation. The plan contains all possible information relevant to the proposal. The plan is then submitted for approval to the stockholders of the constituent corporations at separate meetings. The vote of stockholders owning at least 2/3 of the outstand ing capital stock is necessary for the approval of the plan in the case of a stock corporation, and 2/3 of the members in the case of a non-stock corporation. The plan may be Business & the law Effects of valid merger or con solidation are provided for in Sec tion 80 of the Corporation Code which states: 1) “The constituent corpora tions become one single corpora tion, which shall be the corporation designated in the plan of merger or consolidation; 2) “The separate existence of the corporations that merged or consolidated cases, except that of the survivirtg"oT consolidated corp oration which shall possess all the rights, privileges, immunities and powers, and shall be subject to all the duties and liabilities of a corp oration organized under this code; 3) “The surviving or con solidated corporation shall possess all the rights, privileges, immunities and franchises of each constituent corporation and all properties, real or personal and all debts, including subscriptions to shares and other choices of action and all other in terests of or belonging to or due to each constituent corporation shall be taken or • transferred to and vested in such surviving or consolid ated corporation, without further act or deed; 4) “The surviving or consolid ated corporation shall be liable for all the obligations of each cons tituent corporation, as if such sur viving or consolidated corporation had itself incurred such obligations. Any action pending, by or against any of the constituent corporations may be prosecuted by or against the surviving or consolidated corp oration. No rights of credits nor any lien shall be impaired by such merger or consolidation.” EXEQUIEL S. LETICIA M. LOCSIN MEMBER Hlimo Amendments Individuals The filing of individual income tax returns, Section 45 (c) of the National Internal Revenue Code, now provides: “When to file — The return of th,e following individuals shall be filed on or before the eighteenth day of March of each year, covering income of the preceding taxable year: “(a) Residents of the Philip pines, whether citizens or aliens whose income have been derived solely from salaries, wages, inter ests, dividends, allowances, commis sions, bonuses, fees, pensions, or any combination thereof. “(b) The return of all other indi viduals not mentioned above, in cluding non-resident citizens shall be filed on or before the fifteenth day of April of each year covering income of the preceding taxable year.” Corporate Returns Section 46(b) now reads as follows: “(b) Fiscal year of corporations — Every corporation (other than partnerships, no matter how created or organized) may designate the last day of any month id the year as the day of the closing of its fiscal year, and shall be entitled to have the tax payable by it com puted upon the basis of the net income as certained as herein ----------------provided for the year ■MKwwnlBfiB ending on the day so designated in the year preceding the date of assessment instead of upon the basis of the net income for the calendar year preceding the date of assessment; and it shall give notice of the day it has thus designated as the closing of its fiscal year to the Commissioner of Internal Revenue at any time not less than 30 days prior to the 15th day of April of the year in which its return would be filed of made upon the basis of the calendar year.” Payment & assessment The provision on the payment and assessment of income tax was amended to read as follows: “Sec. 51. Payment and assess ment of income tax — (a) Payment of tax. — (1) In general. The total amount of tax imposed by this Title shall be paid at the time the return is filed. Such tax shall be paid by the person subject thereto. If the return is filed after the time prescribed by law (including cases in which an extension of time for filing the return has been gran ted under section 47 of this Code), there shall be paid at the time of such filing the tax or instalment which would have been payable on or before such time if the return had been filed within the time pres cribed by law, and the remaining instalment shall be paid at the time at which, and in the amount in which, it would have been payable if the return had been so filed, sub ject to the payment of interest at 20% per annum from the original due date. In the case of tramp vessels, the shipping agents and/or the hus banding agents, and in their ab sence, the captains thereof are re quired to file the return herein pro vided and pay the tax due thereon before their departure. Upon failure of the said agents or captains to file the return and pay the tax, the Bureau of Customs is hereby autho rized to hold the vessel and prevent its departure until proof of pay ment of the tax is presented or a sufficient bond is filed to answer for the tax due. (2) Instalment payment — When the tax due is in the excess of P2,000, the taxpayer other than a corporation taxable under Section 24, self-employed individuals who income tax may be required to pay estimated income tax under Chapter X, and the withholding agents required to deduct and withhold the tax under Section 53 and 54, all of this Title, may elect to pay the tax in two equal instalments, in which case, the first instalment shall be paid at the time the return is filed and the second instalments, on or before the 18th day of July following the close of the calendar year. If any instalment is not paid on or before the date fixed for its payment, the whole amount of the tax unpaid becomes, due and payable, together with the delinquency penalties.” “(d) Interest on deficiency — Interest upon the amount deter mined as a deficiency shall be assessed at the same time as the de ficiency and shall be paid upon notice and demand from the Com missioner and shall be collected as a part of the tax at the rate of 20% per annum from the date prescribed for the payment of the tax, (or, if the tax is paid in instalment from the date prescribed for the payment of the first instalment) to the date the deficiency is assessed: Provided, That the maximum amount that may be collected as interest on the Tax Talk deficiency shall in no case exceed the amount corresponding to a period of three years, the present provisions regarding prescription to the contrary notwithstanding.” “(e) Additions to the tax in case of nonpayment — (1) Tax shown on the return. — Where the amount determined by the taxpayer as the tax imposed by this Title or any instalment thereof, or any part of such amount or instalment, is not paid on or before the date pres cribed for its payment, there shall be collected as a part of the tax, interest upon such unpaid amount at the rate of 20% per annum from the date prescribed for its payment until it is paid: Provided, That the maximum amount that may be col lected as interest or, deficiency shall in no case exceed the amount cor responding to a period of three years, the present provisions re garding prescription to the contrary notwithstanding.” “(2) Deficiency — Where a defi ciency, or any interest assessed in connection therewith under para graph (d) of this section, or any addition to the taxes provided for in Section 72 of this Code is not paid in full within 30 days from the date of notice and demand from the Commissioner of Internal Reve nue, there shall be collected upon the unpaid amount as part of the tax, interest at the rate of 20% per annum from the date of such notice and demand until it is paid: Pro vided, That the Inaximum amount that may be collected as interest on deficiency shall in no case exceed the amount corresponding to a period of three years, the present provisions regarding prescription to the contrary notwithstanding.” “(3) Surcharge — If any amount of tax shown on the return is not paid in full on or before the date prescribed for its payment under paragraph (a) of this Section, or any amount of deficiency, and any interest assessed in connection therewith, is not paid in full within the period prescribed in the assess ment notice and demand required under paragraph (b) of this Section, there shall be collected in addition to the interest prescribed herein and in paragraph (d) above and as part of the tax a surcharge of 10% of the amount of tax unpaid.” (Presidential Decree No. 1705)

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