XYY Corp. secured a loan from X Bank in the amount of P120,000. As part of the proceeds of the loan, preferred shares of
Posted: Sun May 08, 2022 10:02 am
XYY Corp. secured a loan from X Bank in the amount of P120,000.
As part of the proceeds of the loan, preferred shares of stocks
were issued to X Bank, through its officers B and C. In other
words, instead of giving the legal tender totaling to the full
amount of the loan which is P120,000. X Bank lent such amount
partially in the form of money and partially of stockholder
certificates, each for 400 shares with a par value of P10 per
share, or for P4,000 each, for a total of P8,000. Said stock
certificates were in the name of B and C, who subsequently,
however, endorsed the shares in favor of B.
Said certificates of stock bear the following terms and conditions:
The Preferred Stock shall have the following rights, preferences,
qualification, and limitations, to wit:
1. Of the right to receive a quarterly dividend
of 1%, cumulative and participating
2. That such preferred shares may be redeemed by
the system of drawing lots, at any time after 2 years from the date
of issue at the option of the Corporation
Afterward, XYY Corp. proceeded against X Bank and filed a Complaint
anchored on XYY Corp.’s alleged rights to have X Bank redeem the
same under the terms and conditions of the stock
certificates.
Can X Bank be compelled to redeem the preferred shares
issued to XYY Corp.? Why or Why not? Explain your answer
briefly.
As part of the proceeds of the loan, preferred shares of stocks
were issued to X Bank, through its officers B and C. In other
words, instead of giving the legal tender totaling to the full
amount of the loan which is P120,000. X Bank lent such amount
partially in the form of money and partially of stockholder
certificates, each for 400 shares with a par value of P10 per
share, or for P4,000 each, for a total of P8,000. Said stock
certificates were in the name of B and C, who subsequently,
however, endorsed the shares in favor of B.
Said certificates of stock bear the following terms and conditions:
The Preferred Stock shall have the following rights, preferences,
qualification, and limitations, to wit:
1. Of the right to receive a quarterly dividend
of 1%, cumulative and participating
2. That such preferred shares may be redeemed by
the system of drawing lots, at any time after 2 years from the date
of issue at the option of the Corporation
Afterward, XYY Corp. proceeded against X Bank and filed a Complaint
anchored on XYY Corp.’s alleged rights to have X Bank redeem the
same under the terms and conditions of the stock
certificates.
Can X Bank be compelled to redeem the preferred shares
issued to XYY Corp.? Why or Why not? Explain your answer
briefly.