k. Sale of Delinquent Shares

Sale of Delinquent Shares

Under the Revised Corporation Code, the board of directors may, by resolution, order the sale of delinquent stock, specifically stating the amount due on each subscription plus accrued interest, and the date, time, and place of the sale, which must not be less than thirty (30) days nor more than sixty (60) days from the date the stock became delinquent¹. Notice of the sale, together with a copy of the resolution, must be sent to every delinquent stockholder either personally, by registered mail, or through other means provided in the bylaws, and published once a week for two (2) consecutive weeks in a newspaper of general circulation in the province or city where the principal office of the corporation is located¹.

Unless the delinquent stockholder pays the corporation the full balance due on the subscription, along with accrued interest, costs of advertisement, and expenses of the sale on or before the specified date, or unless the board of directors otherwise orders, the delinquent stock shall be sold at a public auction¹. The stock is sold to the bidder who offers to pay the full amount of the balance on the subscription together with accrued interest, costs of advertisement, and expenses of sale, for the smallest number of shares or fraction of a share, after which the stock purchased is transferred to the purchaser in the books of the corporation and a certificate of stock is issued¹.

In addition, a stock corporation is authorized to purchase or acquire its own delinquent shares sold during a delinquency sale in order to collect or compromise an indebtedness arising out of an unpaid subscription, provided that the corporation has unrestricted retained earnings in its books to cover the shares to be purchased or acquired².