Practice question
A company proposes stock issuance based on a lawful transfer from unrestricted retained earnings to stated capital. Proper approvals, valuation and all other requirements are met. An objector argues the issuance is necessarily unsupported because no investor brings new cash. Which is correct?
- Fresh external cash is always indispensable
- Every retained-earnings transfer is prohibited
- All stock issuances are loans
- Section 61(e) expressly permits the stipulated source; absence of fresh cash alone does not defeat it.
- The transfer automatically pays every creditor
Legal references
- Revised Corporation Code, RA 11232, Section 61: https://lawphil.net/statutes/repacts/ra2019/ra_11232_2019.html
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