Whereas, a decrease of the authorized capital stock will not be approved by the SEC if the effect is to prejudice the rights of the creditors, and yet no such qualification is provided for under the Corporation Code when it comes to the increase in authorized capital stock, because – It is an application of the coverage of the trust fund that always makes an increase of authorized capital stock favorable or non-prejudicial to the creditors of the corporation. It is presumed that creditors of the corporation will always be happy with the increased of its authorized capital stock. No appraisal right is triggered by an increase in the authorized capital stock of the corporation. Creditors of the corporation, not being within the intra-corporate relationship, have no standing on matters that pertain to the capital structure of the corporation.
Whereas, a decrease of the authorized capital stock will not be approved by the SEC if the effect is to prejudice the rights of the creditors, and yet no such qualification is provided for under the Corporation Code when it comes to the increase in authorized capital stock, because –
It is an application of the coverage of the trust fund that always makes an increase of authorized capital stock favorable or non-prejudicial to the creditors of the corporation.
It is presumed that creditors of the corporation will always be happy with the increased of its authorized capital stock.
No appraisal right is triggered by an increase in the authorized capital stock of the corporation.
Creditors of the corporation, not being within the intra-corporate relationship, have no standing on matters that pertain to the capital structure of the corporation.
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