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What is a Corporation?

“A corporation is an artificial being created by operation of law, having


the rights of succession and the powers attributes and properties
expressly authorized by law or incident to its existence.” (Corporation
Code of the Philippines, Sec. 2)
Stakeholders of a Corporation

• Management – the party given the authority to implement the policies as


determined by the Board in directing the course/business activities of the
corporation. (SEC, Code of Corporate Governance)

• Creditors – the party who lend to the corporation goods, services or money.

• Shareholders – the people who invest their capital in the corporation.

• Employees – the people who contribute their skills, attributes and ingenuity to
the corporation.
Stakeholders of a Corporation

• Clients - the buyers of the corporation’s product or services for final


consumption, enjoyment, or for use in the production/creation if another goods.

• Government – the apparent interest of this party are the taxes paid by the
corporation.

• Public – the result of the responsible or irresponsible conduct of a corporation


affects the public in many ways.
Purposes of Corporation

• Early Stage Survival - the main objective of an entity especially for those which
has started is the survival during the early years of existence.

• To Increase Profit - the social responsibility of the business is to increase profit.

• To Offer Vital Services to the Public - corporations offer help in the areas in
which the government has a hard time providing.

• To Offer Goods and Services to the Mass Market – meet the needs of the lower
income class group by offering affordable goods.
Shareholders, Bondholders and Directors

• The other players of the corporation, complete the cast for the corporation to
operate

• Shareholders – will be having its claim in the form of dividend

• Bondholders – will be having a claim in the form of interest earned via long term
agreement

• Directors – will be having a claim on their salaries, incentives, stock oprions and
bonuses
Shareholders

• An artificial or natural persons that are legally regarded as owners of the


corporation.
• Bestowed with special privileges depending on the class of their stockholding
• Rights may include the following:
1. right to vote on matters such as elections of BOD
2. right to propose shareholder resolution
3. right to receive dividends
4. pre-emptive right
5. right to liquidating dividends
Bondholders

• A person/entity that is a holder of a currently outstanding bond

• Has complete authority to mange the bond in any way

• Given priority during the process of liquidation

• The bonds are not exposed to fluctuation of interest rates

• Will receive a regular interest payments during the life of the bond
Board of Directors

• Collegial body that exercises the corporate powers of all corporations

• Conducts all business and controls/holds all assets of the corporation

• Acts as the governing body of the corporation

• Will be headed by a chairman considered as the most influential person

• Activities are determined by powers, duties and responsibilities delegated to it of


conferred on it by authority
Board of Directors

• Duties may include the following:


1. governing the organization by establishing broad policies and objectives
2. selecting, appointing, supporting and reviewing the performance of the
chief executive
3. ensuring the availability of adequate financial resources
4. approving annual budgets
5. accounting to the stakeholders the organization’s performance
Multinational and Transnational Corporations

Multinational Corporations Transnational Corporation


• Has investment in other countries, • Registered and operates in more than one
but do not have coordinated product country at a time.
offerings in each country.
• Has its headquarters in one country and
• More focused on adapting their operates wholly /partially owned
subsidiaries in one/more countries.
products to each individual local
market.
• Have invested in foreign operations, have
a central corporate facility but give
decision making, R&D and marketing
powers to each individual foreign market.
Multinational and Transnational Corporations

• Desire for growth, desire to escape the protectionist policies of an importing


country, preventing competition, to reduce cost using cheap labor in developing
countries are some of the possible motives of creating MNC and TNC.

• Another concern for TNCs is their ability to use foreign subsidies to minimize tax
liability.