PARTCOR

Section 23

Corporate powers exercised by board of directors or trustees

Board of Directors/Trustees: Governing body of the corporation chosen by the

stockholders/members

• Corporations can act only through its board of directors or trustees

• All business conducted; property of corporations controlled and held by

BOD/Trustees

• Elected to oversee the management and operation of the corporation

• Authority to determine policy and conduct ordinary business of the

corporation

• Do not require consent of stockholders (who have indirect control through

their votes)

• Contracts between corporation and 3rd persons

• Stockholders: Not agents; action is only advisory and not binding.

• Cannot be interfered by the courts as long as BOD/Trustees act honestly and

contract does not violate rights of minority

Reason for the rule:

• Efficiency especially to large organizations

• Unwise to entrust administration of corporate affairs to a host of widely

scattered stockholders who are unfamiliar with the business and unable to
comprehend corporate management

Limitations on powers of BOD/Trustees

1. Observe limitations imposed by the Constitution, statues and rules and

regulations having the force of low on the corporations (ex. Articles of
incorporation and by-laws)

2. Cannot perform acts involving fundamental changes in the corporations

(amendments of articles of incorporation)

3. Cannot exercise powers not possessed by the corporation

Powers exercised by BOD/Trustees as a board

• Must act together as a body in order to bind the corporation by their acts
(board meeting)
 • Meet and act “at a meeting at which there is QUORUM”

Reasons for the rule:

1. Full discussion

2. BOD/Trustees have no power other than AS A BOARD.

Not agent of the corporation, no power acting individually to bind the
corporation

*** Close Corporation: limited to selected persons/person of a family

Directors w/o a meeting shall be deemed valid

Exceptions to the rule: