Corporate

Powers
Definition/
Concept
Applicable
Provision
Rules/Guidelines Limitations Voting
Requirements
Ratification
Requirement
Oter Remar!s
Power to
extend or
shorten
corporate
term
A private
corporation may
extend
or shorten its term
as stated in the
articles of
incorporation.
Sec. 37,
Corporatio
n Code
Written notice of the
proposed action and of the time and
place of the meeting shall be
addressed to each
stocholder or member at his place of
residence as shown on the boos of
the corporation and deposited to the
addressee in the post office with
postage prepaid, or served.
!n case of extension
of corporate term,
any dissenting
stocholder may
exercise his
appraisal right "nder
the conditions
provided in the code
Approved by a
ma#ority
vote of the board
of directors or
tr"stees
ratified at a
meeting by the
stocholders
representing at
least two$thirds
%&'3( of the
o"tstanding
capital stoc or
by at least
twothirds
%&'3( of the
members in
case of non$
stoc
corporations
)ay be "sed as a means to
vol"ntarily dissolve a
corporation. S"ch vol"ntary
dissol"tion may be effected
by amending the articles of
incorporation to shorten the
corporate term (Sec. 120).
Power to
increase or
decrease
capital
stoc* inc"r,
create or
increase
bonded
indebtednes
s
A private
corporation may
Sec. 3+,
Corporatio
n Code
Prior written notice of the proposed
increase or decrease of the capital
stoc indicating the time and place of
meeting addressed to each
stocholder m"st be made either by
mail or personal service*
A certificate in d"plicate signed by a
ma#ority of the directors of the
corporation, co"ntersigned by the
chairman and the secretary of the
stocholders meeting*
,iling of the certificate with the S-C*
and
Approval thereof by the S-C.
!n case of increase
in capital stoc, &./
of s"ch increased
capital m"st be
s"bscribed and that
at
least &./ of the
amo"nt s"bscribed
m"st be paid
either in cash or
property*
!n case of decrease
in capital stoc, the
same m"st
not pre#"dice the
right of the creditors*
Approved by a
ma#ority vote of
the board of
directors
0atification by
the stocholders
holding or
representing at
least &'3 of the
o"tstanding
capital
stoc at a
meeting d"ly
called for that
p"rpose
Ways of !ncreasing A"thori1ed
Capital Stoc2
a. 3y increasing'decreasing the
n"mber of shares
and retaining the par val"e*
b. 3y increasing'decreasing the par
val"e of existing
shares witho"t increasing'decreasing
the n"mber
of shares*
c. 3y increasing'decreasing the
n"mber of shares
and increasing'decreasing the par
val"e.
Power to
deny pre$
emptive
right.
All stocholders of a
stoc corporation
shall
en#oy pre$emptive
right to s"bscribe to
all iss"es or
Sec. 34,
Corporatio
n Code
Provided, 5hat s"ch pre$emptive right
shall not
extend to shares to be iss"ed in
compliance with laws re6"iring stoc
offerings or
minim"m stoc ownership by the
s"ch right may be
denied by the
articles of
incorporation or an
amendment thereto
Approval of the
stocholders
representing two$
thirds %&'3( of the
o"tstanding capital
stoc, in exchange
7enial of pre$emptive right extends
to shares iss"ed in
good faith in exchange for property
needed for corporate p"rposes or in
payment of previo"sly
contracted debts.
Page " of #
disposition of
shares of any class,
in
proportion to their
respective
shareholdings,
"nless s"ch right is
denied by the
articles of
incorporation or an
amendment thereto2
p"blic* or to shares to be iss"ed in
good faith
for property
needed for
corporate
p"rposes or in
payment of a
previo"sly
contracted debt.
Power to
sell or
dispose
other assets
A private
corporation may
sell, lease,
exchange,
mortgage, pledge or
otherwise
dispose of all or
s"bstantially all of
its property and
assets, incl"ding its
goodwill, "pon
s"ch terms and
conditions and for
s"ch consideration,
which may be
money, stocs,
bonds or other
instr"ments for the
payment of money
or other property or
consideration,
as its board of
directors or tr"stees
may deem
expedient
Sec. 89,
Corporatio
n Code
Written notice of the proposed action
and of the time and place of the
meeting shall be addressed to each
stocholder or member at his place of
residence as shown on the boos of
the corporation and deposited to the
addressee in the post office with
postage prepaid, or
served personally2 Provided, 5hat any
dissenting stocholder may exercise
his appraisal right.
S"b#ect to the
provisions of
existing laws on
illegal combinations
and monopolies
3y a ma#ority vote
of its
board of directors
or tr"stees
A"thori1ed by the
vote of
the stocholders
representing at
least two$thirds
%&'3( of the
o"tstanding capital
stoc, or
in case of non$
stoc corporation,
by the vote of at
least to two$thirds
%&'3( of the
members, in a
stocholder:s or
member:s meeting
d"ly called for the
p"rpose
!n non$stoc corporations where
there are no members with voting
rights, the vote of at least a ma#ority
of the tr"stees in office will be
s"fficient a"thori1ation for the
corporation
to enter into any transaction
Power to
ac6"ire own
shares
A stoc corporation
shall have the
power to p"rchase
Sec. 8;,
Corporatio
n Code
5hat the corporation has "nrestricted
retained earnings in its boos to cover
the shares to be p"rchased or
Page $ of #
or ac6"ire its own
shares for a
legitimate corporate
p"rpose or
p"rposes
ac6"ired2
;. 5o eliminate fractional shares
arising o"t of stoc dividends*
&. 5o collect or compromise an
indebtedness to the corporation,
arising
o"t of "npaid s"bscription, in a
delin6"ency sale, and to p"rchase
delin6"ent shares sold d"ring said
sale* and
3. 5o pay dissenting or withdrawing
stocholders entitled to payment for
their shares "nder the provisions of
this Code.
Power to
invest
corporate
f"nds in
another
corporation
or b"siness
or for any
other
p"rpose
A private
corporation may
invest
its f"nds in any
other corporation or
b"siness or for any
p"rpose other than
the primary
p"rpose for which it
was organi1ed
Sec. 8&,
Corporatio
n Code
Written notice of the proposed
investment and the time and place of
the meeting shall be addressed to
each stocholder or member at his
place of residence as shown on the
boos of the corporation and deposited
to the addressee in the post office with
postage prepaid, or served personally
Approved by a
ma#ority of the
board of directors
or tr"stees and
ratified by the
stocholders
representing at
least two$thirds
%&'3( of the
o"tstanding capital
stoc, or by at
least two thirds
%&'3( of the
members in the
case of
non$stoc
corporations, at a
stocholder:s or
member:s meeting
d"ly called for the
p"rpose
Any dissenting stocholder shall
have appraisal right as provided in
this Code2 Provided, however, 5hat
where the investment by the
corporation is reasonably necessary
to accomplish its primary p"rposeas
stated in the articles of incorporation,
the approval of the stocholders or
members
shall not be necessary
Power to
declare
dividends
5he board of
directors of a stoc
corporation may
declare dividends
o"t of the
Sec. 83,
Corporatio
n Code
5hat any cash dividends d"e on
delin6"ent stoc shall first be applied
to the "npaid balance on the
s"bscription pl"s costs and expenses,
while stoc dividends shall be withheld
Stoc corporations
are prohibited from
retaining s"rpl"s
profits in excess of
one h"ndred %;99/(
Approval of
stocholders
representing not
less than two$
thirds %&'3( of the
Stoc corporations are prohibited
from retaining s"rpl"s profits in
excess of one h"ndred %;99/(
percent of their paid$in capital stoc,
except2 %;( when #"stified by definite
Page % of #
"nrestricted
retained earnings
which shall be
payable in cash,
in property, or in
stoc to all
stocholders on the
basis of o"tstanding
stoc held by them
from the delin6"ent stocholder "ntil
his "npaid s"bscription is f"lly paid
percent of their paid$
in capital stoc, save
to some exceptions.
o"tstanding capital
stoc at
a reg"lar or
special meeting
d"ly called for the
p"rpose
corporate expansion pro#ects or
programs approved by the board of
directors* or %&( when the corporation
is prohibited "nder any loan
agreement with any financial
instit"tion or
creditor, whether local or foreign,
from declaring dividends witho"t
its'his consent, and s"ch consent
has not yet been sec"red* or %3(
when it can be clearly shown that
s"ch retention is necessary "nder
special circ"mstances obtaining in
the corporation, s"ch as
when there is need for special
reserve for probable contingencies
Power to
enter into
manageme
nt contract.
A corporation may
concl"de a
management
contract with
another corporation
Sec. 88,
Corporatio
n Code
%;( where a stocholder or
stocholders
representing the same interest of both
the managing and the managed
corporations own or control more than
one$third %;'3( of the total o"tstanding
capital stoc entitled to vote of the
managing corporation* or %&( where a
ma#ority of the members of the board
of directors of the managing
corporation also constit"te a ma#ority
of the members of the
board of directors of the managed
corporation, then the management
contract m"st be approved by the
stocholders of the managed
corporation owning at least two$thirds
%&'3(
of the total o"tstanding capital stoc
entitled to vote, or by at least two$
thirds %&'3( of the members in the case
of a non$stoc corporation. <o
management contract shall be entered
into for a period longer than five years
Approved by the
board of directors
and by
stocholders
owning at least the
ma#ority of
the o"tstanding
capital stoc, or by
at least a ma#ority
of the members in
the case of a
non$stoc
corporation, of
both the managing
and the managed
corporation, at a
meeting
d"ly called for the
p"rpose
Page & of #
for any one term
Page # of #