Chapter 3: Organization and
Powers
301. Incorporation of corporations.
302.
Provisions applicable to corporations for profit.
303.
Directors.
304.
Office.
305.
Articles of incorporation.
306.
Name; reservation of.
307.
Articles of incorporation, charters, amendments, recorded where.
308.
Affidavit.
309.
Existence, powers and liabilities.
310.
Capital necessary to engage in business; liability of directors.
311.
Officers.
312.
Extensions and renewals of charters and articles.
313.
Amendments of charters and articles.
314.
Express powers.
315.
Implied powers.
316.
Power prohibited; pledge of stock.
317.
Voluntary transfer of corporate assets; notice to stockholders.
318. Accounts and records.
319.
Stock book; contents, examination of, evidence.
320.
Bylaws; corporation procedure.
A corporation for profit may be
organized as provided in sections 305, 307 to 310, of this division for
any purpose or purposes for which individuals may lawfully associate
themselves.
Source: YSL 2-51 12, modified.
Cross-reference: The statutory provisions on non-profit corporations are found in chapter 8 of this division. The statutory provisions on Business and Professions are found in Title 22 of this Code.
All the provisions in this division
shall apply to corporations for profit.
Source: YSL 2-51 13, modified.
Cross-reference: The statutory provisions on non-profit corporations are found in chapter 8 of this division.
The directors of every corporation
shall be not less than three in number. At least one member of every
board of directors shall be a resident of the State of Yap, except as
otherwise provided in sections 1201 to 1213 of chapter 12 of this
division.
Source: YSL 2-51 14, modified.
Cross-reference: Chapter 12 of this division is on foreign corporations and partnerships.
Every corporation organized under
this division shall maintain an office located in the State of
Yap.
Source: YSL 2-51 15, modified.
Any number of persons not less than
three desiring to form a corporation for profit shall execute articles of
incorporation and acknowledge the same before the Registrar of
Corporations. The articles shall contain the following
particulars:
(a) The name of the corporation, which shall include as the last word thereof the word "Limited," "Incorporated," or "Corporation'' or the abbreviation
"Ltd.", "Inc.," or "Corp.";
(b) The place of its principal office in the State of Yap and its mailing address or post office box;
(c) The purpose or purposes for which the corporation is organized;
(d) The powers of the corporation;
(e) The proposed duration;
(f) The number of directors and the names, citizenship, and mailing addresses of the initial directors and officers;
(g) The names, citizenship, and mailing addresses of the incorporators;
(h) The number of shares of each class of stock that the corporation is authorized to issue; the par values of every share of each class of stock, or that such shares are to be without par value;
(i) If the shares are to be divided into classes, the preferences, privileges, powers, limitations, and relative rights of the shares of each class;
(j) The names of the initial subscribers for shares of each class and the number of shares subscribed for;
(k) The subscription price paid by each initial subscriber for the shares of each class, and, if it is to be paid in a form other than cash, the consideration which is to be paid;
(l)
The amount of capital and paid-in surplus, if any, paid in by each
initial subscriber, separately stating the amount paid in cash and in
property;
(m) The disposition of financial surplus;
(n) Provisions for liquidation;
(o) Provisions for amendment of articles of incorporation;
(p) Provisions for voting by stockholders; and
(q) Any other lawful provisions which may be desired by the corporation for the purpose of defining, limiting, or regulating the powers of the corporation and the powers of its board of directors.
Source: YSL 2-51 16.
(a) No corporation shall take any name (whether of a person or not) identical, or so similar as to lead to confusion and uncertainty, with the name of any corporation or partnership previously authorized to do business in the State of Yap.
(b) The exclusive right to the use of a corporate name may be reserved by any person intending to organize a corporation under this division, by any domestic corporation intending to change its name, or by any foreign corporation intending to do or carry on any business in the State of Yap. Reservation shall be made by filing with the Registrar of Corporations an application to reserve a specified corporate name, and payment to the Registrar of a fee of $5.00. If the Registrar finds that the name is available for corporate use, it shall be reserved for the exclusive use of the applicant for a period of sixty days.
Source: YSL 2-51 17, modified.
Cross-reference: The statutory provisions on the Registrar of Corporations are found in chapter 2 of this division.
The articles of incorporation and
charters, and any subsequent amendment thereto, shall be filed with the
Registrar of Corporations and, if in compliance with the statutory
requirements, shall be accepted for record and shall thereafter be open to
inspection of the public during business hours.
Source: YSL 2-51 18.
An affidavit sworn to by the
president, secretary, and treasurer of the corporation, attesting to the
truth of all factual representations contained in the articles of
incorporation, shall be filed with the Registrar of Corporations at the
time of the filing of the articles of incorporation.
Source: YSL 2-51 19.
Cross-reference: The statutory provisions on the Registrar of Corporations are found in chapter 2 of this division.
On the filing of the articles of
incorporation and the required affidavit, the persons who have subscribed
the articles, their successors and assigns, shall thereafter be deemed to
be a body corporate by the name and style provided in the articles, for
such period of duration as is agreed upon; shall have all the powers and
be subject to all the liabilities provided by law for corporations; and
shall be subject to all general laws then in effect or thereafter
enacted.
Source: YSL 2-51 20.
No corporation for profit shall upon
its incorporation engage in business in the State of Yap until not less
than $1,000.00 of its authorized capital stock has been paid in by
acquisition of cash or by the acquisition of property with a net value of
not less than $1,000.00. In case of any violation of this section by
a corporation, the incorporators and the directors at the time the
corporation begins to engage in business shall in their individual and
private capacities be jointly and severally liable to the corporation and
its stockholders and creditors for any loss suffered, unless the
incorporators can prove that the loss did not occur by reason of the
violation.
Source: YSL 2-51 21, modified.
The officers of a corporation for
profit shall consist of a president, one or more vice-presidents, a
secretary, and a treasurer, each of whom shall be elected or appointed by
the board of directors in the manner prescribed by the bylaws. The
bylaws may provide for the election or appointment of other officers,
assistant officers, and agents. Any two or more offices may be held
by the same person; provided that every corporation shall have not less
than two persons as officers. The authority and duties of all
officers and agents of the corporation shall be as set forth in the
bylaws, or as provided by resolution of the board of directors not
inconsistent with the bylaws.
Source: YSL 2-51 22.
Cross-reference:
The statutory provision on the "bylaws; corporation procedure", is found in section 320 of chapter 3 of this division.
Upon the filing of an application for
an extension or renewal of any articles of incorporation or charter of any
corporation, not more than ten years prior to expiration thereof, the
Registrar of Corporations shall extend or renew the duration of the
articles or charter for the period agreed upon. Each application
shall be accompanied by a verified certificate signed by any two
authorized officers of the corporation, showing that the proposed
extension or renewal has been approved by the vote of the holders of not
less than two-thirds of all its issued and outstanding shares of stock,
voting without regard to class.
Source: YSL 2-51 23.
Cross-reference: The statutory provisions on the Registrar of Corporations are found in chapter 2 of this division.
Subject to the provisions set forth
in this section, the articles of incorporation or charter of any
corporation may be amended by the vote of holders of not less than
two-thirds of all its stock issued and outstanding and having voting
power, or by such larger vote as may be required by the articles of
incorporation or charter. No amendment shall be effective unless
there is filed in the Office of the Registrar of Corporations a verified
certificate signed by any two authorized officers of the corporation,
setting forth the amendment by stating that the articles of corporation or
charter has been amended to read as set forth in the certificate in full,
and certifying that the amendment was adopted by the required vote.
Any amendment so adopted shall become effective and the articles of
incorporation or charter shall be amended on the date of filing of the
certificate of amendment or on such later date as specified in the
certificate of amendment; provided that the Registrar of Corporations
shall not accept the filing of the certificate of amendment until he
determines the amendment to be in conformity with all applicable laws and
regulations. The Registrar of Corporations may withhold the filing
of any certificate of amendment of articles of incorporation or charter
upon receipt of a written objection from any interested person declaring
that such amendment violates an applicable law or regulation, or is
adverse to the public interest. An amendment of an article of
incorporation or charter which in any way reduces the stated percentage of
ownership of shares allocated to citizens of the Federated States of
Micronesia or residents of the State of Yap, or diminishes the rights of
such shareholders, shall be deemed to adversely affect such class of
shareholders and shall be rebuttably presumed to not be in the public
interest. In addition to the above limitation:
(a) No amendment shall confer any other or greater powers or privileges than could lawfully be conferred or obtained in an original charter or articles of incorporation;
(b) No amendment changing the name of the corporation shall become effective until the Registrar has determined that the amendment is not in conflict with section 306 of this chapter; and
(c) If an amendment would make any change which would adversely affect the rights of the holders of shares of any class, then the holders of each class of shares so affected by the amendment shall be entitled to vote as a class upon the amendment, regardless of other limitations or restrictions on the voting power of the class, and in addition to the vote otherwise required, a vote of the holders of two-thirds of each class so affected by the amendment shall be necessary to the adoption thereof. Within a reasonable time following the effective date of the amendment, there shall be filed with the Registrar of Corporations a copy, verified by any two authorized officers of the corporation, of the articles of incorporation or charter of the corporation restated to include all amendments.
Source: YSL 2-51 24, modified.
Cross-reference: Section 306 of this chapter is on "name; reservation of". The statutory provisions on the Registrar of Corporations are found in chapter 2 of this division.
Every corporation created in the
State of Yap shall have the following powers, in addition to any other
powers set forth in or reasonably implied from its articles of
incorporation or charter, except as otherwise expressly limited or denied
by law or by its articles of incorporation or charter:
(a) To have succession by its corporate name for the period limited in its articles of incorporation or charter, together with all duly authorized extensions or renewals;
(b) To sue and be sued in any court;
(c) To make and use a common seal, and alter it at its pleasure;
(d) To hold, purchase, and convey such property as the purposes of the corporation require, and to mortgage, pledge, and hypothecate the same to secure any debt of the corporation; provided that a corporation not wholly owned by citizens of the Federated States of Micronesia may not acquire title to land in the State of Yap and may not enter into an agreement for the use of such land for a term exceeding fifty years;
(e) To sell, convey, mortgage, pledge, lease, exchange, transfer, and otherwise dispose of all or any part of its property and assets;
(f) To purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and deal in and with, shares or other interests in, or obligations of, other domestic or foreign corporations, associations, partnerships, or individuals, or of any government, state, governmental district or municipality, or of any instrumentality thereof;
(g) To make contracts and guarantees and incur liabilities, borrow money at such rates of interest as the corporation may determine, issue its notes, bonds, and other obligations, and secure any of its obligations by mortgage or pledge of all or any of its property, franchises, and income;
(h) To lend money for its corporate purposes, invest and reinvest its funds, and take and hold real and personal property as security for the payment of funds so loaned or invested;
(i) To conduct its business, carry on its operations, and have offices and exercise the powers granted by this section in any state of the Federated States of Micronesia, or in any foreign country;
(j) To elect or appoint officers and agents of the corporation and define their duties and fix their compensation;
(k) To make and alter bylaws, not inconsistent with its articles of incorporation or charter or with the laws of this State;
(l) To make donations for the public welfare or for charitable, scientific, or educational purposes; provided that in the case of a corporation being liquidated or dissolved such donations may be paid only if authorized by the vote of the holders of a majority of all of the shares of stock issued and outstanding and having voting power, or by such larger vote as may be required by the articles of incorporation or charter;
(m) To indemnify any person who is or was a director, officer, employee, or other agent of the corporation, who is or was a party to any proceeding by reason of such person. s status with the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding if the person acted in good faith, and, with respect to any criminal proceeding, had no reasonable cause to believe the conduct involved was unlawful; provided that there shall be no indemnification in relation to matters as to which the person is adjudged in the proceeding to be liable for negligence or misconduct in the performance of duty to the corporation;
(n) To pay pensions and establish pension plans, pension trusts, profit sharing plans, stock bonus plans, stock option plans, and other incentive or benefit plans for any of its directors, officers and employees; and
(o) To cease its corporate activities and surrender its corporate franchise.
Source: YSL 2-51 25.
In addition to the powers enumerated
in section 314 and in addition to the powers granted by any other
statutory provisions, every corporation created under this division may
possess and exercise any and all powers, not inconsistent with any
existing law, set forth in its articles of incorporation or charter or
reasonably incidental to the fulfillment of its purpose or purposes or to
the exercise of its powers as set forth in its articles of incorporation
or charter.
Source: YSL 2-51 26, modified.
No corporation created under the laws
of the State shall pledge or hypothecate any of the shares of its unissued
capital stock or in any manner dispose of the same as collateral security.
Any attempted pledge, hypothecation, or disposition shall be
void.
Source: YSL 2-51 27.
A voluntary sale, lease, or exchange
of all or substantially all of the property and assets of any domestic
corporation, including its good will, may be authorized by it upon such
terms and conditions and for such consideration as its board of directors
deems expedient, and for the best interests of the corporation, when and
as authorized or approved by the affirmative vote or consent of the
holders of not less than three-fourths of all stock issued and outstanding
and having voting power. The authorization or approval of the
stockholders may be given before or after the adoption of the resolution
by the board of directors. The articles of incorporation or charter
may require the authorization or approval of a larger proportion of the
stockholders. Notice of the meeting of stockholders called for the
purpose of giving the authorization or approval shall be mailed to all of
the stockholders, whether or not they are entitled to vote. Nothing
in this section shall be deemed to require the approval of the
stockholders except as may be required by the articles of incorporation or
bylaws to enable a corporation to make a mortgage, pledge, assignment, or
transfer of all or any part of its assets as security for any obligation
or liability of any kind or nature or to make a transfer to satisfy or
partially satisfy any obligation or liability.
Source: YSL 2-51 28.
Every corporation shall keep correct and
complete books and records of account and shall keep and maintain at its
principal offices minutes of the proceedings of its stockholders and board
of directors. The books and records of account shall include accounts
of the corporation. s assets, liabilities, receipts,
disbursements, gains, losses, capital, and surplus. The minutes of
the proceedings of the stockholders and board of directors shall show, as
to each meeting of the stockholders or board of directors, the time and
place thereof, whether regular or special, whether notice thereof was
given and if so in what manner, the names of those present at directors.
meetings, the number of shares present or represented at stockholders.
meetings, and the proceedings of each meeting.
Source: YSL 2-51 29.
In every company incorporated under
this division, the trustees, as managers or directors of the company,
shall cause a book to be kept for registering the names of all persons who
are stockholders of the corporation, showing the number of shares held by
them respectively, and the time when they became the owners of the shares.
The book shall be open at all reasonable times for the inspection of
the stockholders. The secretary or any person designated by the
corporation shall give a certified transcript of anything contained in
this stock book upon request of any stockholder. The stockholder may
be required to pay a reasonable charge for the preparation of the
certified transcript. The transcript shall be legal evidence of the
facts therein set forth in any suit by or against the
corporation.
Source: YSL 2-51 30, modified.
Cross-reference: The statutory provisions on stocks is found in chapter 4 of this division.
(a) The initial bylaws of a corporation shall be adopted by its board of directors or by the incorporators. The power to alter, amend or repeal the bylaws or adopt new bylaws, subject to repeal or change by action of the stockholders or members, shall be vested in the board of directors unless reserved to the stockholders or members by the articles of incorporation or charter. The bylaws may contain any provisions for the regulation and management of the affairs of the corporation not inconsistent with law or the articles of incorporation or charter.
(b) Every corporation shall keep in its principal office for the transaction of its business in the State the original or a copy of the bylaws as amended or otherwise altered to date, certified by an officer of the corporation, which shall be open to inspection by the stockholders or members at all reasonable times during office hours. No person dealing with the corporation shall be charged with constructive notice of the bylaws.
Source: YSL 2-51 50.