SECTION 36

Powers of Corporation

Classifications of
Corporate Powers and
Authority
Express Powers
those expressly authorized by law, or those granted
by the words of the corporate charter or applicable
laws.
Incidental Powers
powers which a corporation can exercise by the
mere fact of its being a corporation and are
impliedly granted
Implied Powers
powers which are reasonably necessary to execute
the express powers granted to a corporation

Limitations of These
Powers
a. Constitutional limitations
The exploration, development, and utilization of
natural resources shall be under the full control and
supervision of the State.
Private corporations may not hold alienable lands
of the public domain except by LEASE.
Filipinos and private corporations, provided that at
least 60 per centum of the capital stock is owned
by Filipinos, shall be preferred on all rights,
privileges, and concessions covering the national
economy and patrimony.

Limitations of These
Powers
b. Limitation on corporate powers to purchase own
shares
c. Limitation on the power to give gifts and
donations
d. Limitation on the power to invest its fund in
another corp.
e. Acquisition of shares of stock of other corporation

Other Express Powers

a. Power to extend or shorten the corporate term
b. Power to increase or decrease the capital stock
c. Power to incur, create, or increase bonded
indebtedness
d. Power to deny pre-emptive right
e. Power to sell corporate property
f. Power to acquire its own share
g. Power to invest its corporate fund
h. Power to declare dividend
i. Power to enter into a management contract

SECTION 37
Powers of Corporation

Extending or Shortening
Corporate Term
Requirements:
a. Majority vote of the Board of Directors or Trustees
and consented by at least 2/3 of the outstanding
capital stock OR by at least 2/3 of the members
if it is a non-stock corporation.
b. Written notice of the proposed action and of the
time and place of meeting shall be addressed to
each stockholder or member.
Note: The dissenting stockholders are given
appraisal right whenever the term of existence
of a corporation is extended or shortened.

SECTION 38
Powers of Corporation

Alteration of Capital Stock

a. Increasing the capital stock
b. Decreasing the capital stock
c. Changing the number or par value of the shares
without increasing or diminishing the aggregate
amount of capital stock
Requirements:
Majority vote of the Board of Directors and the
consent of at least 2/3 outstanding capital
stock, voting and non-voting
The said increase or decrease of the stock shall
be filed and approved by the SEC

Alteration of Capital Stock

If the capital stock of the corporation is
increased, the 25% of the increased capital
stock must be subscribed and at least 25% of
the subscription must be paid to the
corporation before the certificate of increase of
capital stock is filed with the SEC.
Example:
The capital stock of STD corporation is increased
from P100,000 to P300,000 with a par value of
P100.

Alteration of Capital Stock

SOLUTION:
P100,000 P100 = 1,000 shares
P300,000 P100 = 3,000 shares
= 2,000 shares
2,000 shares x 0.25 = 500 shares
Thus, 500 shares must be subscribed.
500 shares x P100 = P50,000
P50,000 x 0.25 = P12,500
Thus, P12, 500 must be paid to the STD
corporation.

Corporate Bond
Corporate Bond
An instrument, representing a corporate debt,
wherein the corporation assumes to pay a fixed
sum at a stated time with interest at a fixed rate
until maturity.
Parties to a Bond:
a. Borrower corporation
b. Bondholders
c. Trustee

Kinds of Bonds
1. Registered Bond
a bond payable to a particular individual,
whose name is entered on the books of the
corporation as the registered owner.
2. Coupon Bond
a bond payable to bearer and provided with
interest warrants called coupons for each
installment of interest
3. Convertible Bond
a bond which may be converted into the stock
of a corporation under certain conditions.

Kinds of Bonds
4. Funding Bond
a bond issued to pay-off prior floating
indebtedness of the corporation issuing it.
5. Collateral Trust Bond
a bond secured by stocks or other bonds or
both, which are owned by the debtor, the
securities being deposited with a trustee for
the bondholders.
6. Guaranteed Bond
a bond whose principal amount or interest or
both are guaranteed by a company other than
the debtor.

Kinds of Bonds
7. Equipment Bond
a bond secured by a mortgage or pledge on
corporate movable equipment.
8. Income Bond
a bond which carry interest only in so far as
interest is earned from the net income from the
corporation within an interest period.
9. Debenture Bond
a written promise to repay the money loaned
and has no specific fund or property as security
for its payment.

Kinds of Bonds
10. Mortgage Bond
a bond for the securing of which certain real
property of the issuer is mortgaged.