Rights of a Foreigner in Winding Up a Corporation to Acquire Real Estate in the Philippines
Question:
In case a foreigner decides to create a corporation to acquire real estate property, during the winding up of the corporation, up to what extent is the right of the foreigner?
Answer:
Legal Framework:
Foreign Ownership Limitations: In the Philippines, foreign individuals or corporations cannot own more than 40% of the corporation's capital stock when the corporation owns land.
Corporate Existence: The corporation is a separate legal entity, and its assets, including real estate, are not directly owned by the shareholders.
Winding Up: The process of winding up involves settling the corporation's affairs, paying its debts, and distributing the remaining assets to shareholders in accordance with their shareholdings.
Asset Distribution: Upon winding up, the foreign shareholder has the right to receive assets or their equivalent value in proportion to their ownership in the corporation, limited to the 40% foreign ownership cap.
Due Process: A foreign shareholder has the right to due process during winding up, including notice of meetings and the opportunity to participate in decisions.
Liquidation Preference: If specified in the Articles of Incorporation or bylaws, certain shareholders might have a "liquidation preference," which would be honored during the winding-up process.
Inspection of Records: A shareholder has the right to inspect the corporate records relevant to winding up.
Challenge Decisions: The foreign shareholder has the right to challenge any corporate decisions related to winding up if they believe these are not in accordance with Philippine corporate law or are prejudicial to minority shareholders.
Legal Recourse: In cases of disputes, the foreign shareholder may resort to legal action to protect their rights.
Conclusion:
The foreigner's rights during the winding up of the corporation mainly depend on their percentage of ownership, subject to the 40% limit on foreign ownership in land-holding corporations in the Philippines. The foreign shareholder is entitled to due process, asset distribution, and other rights as specified by Philippine law and the corporate bylaws.
Disclaimer:
This article is intended for informational purposes only and should not be construed as legal advice. Consultation with a qualified attorney is recommended for personalized legal guidance.
