CORPORATE POWERS &

AUTHORITY
CORPORATE MANAGEMENT JURISPRUDENCE
ORGANIZATIONAL CHART
OF DOMESTIC CORPORATION IN THE PHIL
 THE CORPORATE CONTRACT

• The first step in the formation of corporation is the filing with

the SEC the Articles of Incorporation (AOI) with corresponding
treasurer’s affidavit indicating that 25 percent of the capital
stock has been subscribed and 25 percent of such subscribed
stock has been actually paid and is in his possession.
• In case of banks, banking institution,
insurance corporation etc. (see last par of Sec. 17, BP Blg 68),
favorable recommendation of the government agency is
necessary before such corporation may be formed.
• After payment of appropriate fees, SEC shall issue a certificate
of incorporation which commences the corporate existence
of the corporation (Sec. 19 , BP Blg 68).
 ARTICLES OF INCORPORATION (AOI)
NATURE

• AOI is an agreement that gives rise to obligations:

• Between the corporation and the state (because it is under
the AI by which the state grants the primary franchise.)
• Between the state and stockholders
• Between the corporation and stockholders - the stockholders
manifest their consent through their subscription of stocks
and through voting as against the corporation
• Among stockholders
• Between the stockholders and the Board of Directors
• Between the corporation and the public (since the AOI is a
public document.)
• AOI is a public document.
 ARTICLES OF INCORPORATION (AOI)
1. Corporate name;
2. Primary and secondary purposes;
3. Principal office;
4. Term of the corporation ;
5. Names, nationalities and
residences (NNR) of
incorporators;
6. Number of directors or trustees,
5-15;
7. Names, nationalities and
residence of the Incorporating
Directors;
CONTENTS
8. Capital stock, number of which
it is divided and par value
and NNR of original subscriber
and amount paid by each: in
non-stock corporation, the
capita and NNR of contributors
and the amount contributed;
9. Treasurer’s Affidavit of
subscription;
10.Favorable recommendation of
government agency (if
necessary, Sec. 17); and
11.Other matters not inconsistent
with law.
 CORPORATE NAME

• Sec. 18, BP Blg. 68: No corporate name may be allowed by the SEC
if the proposed name is identical or deceptively confusing or
similar to that of any existing corporation or to any other name
already protected by law or is patently deceptive, confusing or
contrary to existing laws. When a change in the corporate name is
approved, the Commission shall issue an amended certificate of
incorporation under the amended name.
• The policy behind the foregoing prohibition is to avoid fraud upon
the public that will occasion to deal with the entity concerned, the
evasion of legal obligations and duties, and the reduction of
difficulties of administration and supervision over corporations.
(Industrial Refractories Corp. v. Court of Appeals, 390 SCRA 252
[2002]).
 PURPOSE OF THE CORPORATION

• It confers as well as limits the powers which a corporation may

exercise. Other reasons:
1. Prospective investors shall know the kind of business the
corporation deals with;
2. Management shall know the limits of its action;
3. A third party can know whether his dealing with the corporation is
within the corporate functions and powers; and
4. For the administrative supervision and monitoring of the State, to
determine which particular agency shall have jurisdiction over the
operations of the corporation.
• The purpose must be lawful, having only one primary purpose
and many secondary purposes.
 PRINCIPAL OFFICE
OF THE CORPORATION

• Sec. 51 Place and time of meetings of stockholders or members –

Stockholders’ or members’ meetings, whether regular or special,
shall be held in the city or municipality where the principal office of
the corporation is located and if practicable in the principal office
of the corporation: Provided, That Metro Manila shall, for
purposes of this section, be considered a city or municipality. (BP
Blg. 68)
• Notice of meetings shall be in writing, and the time and place
thereof stated therein.
• All proceedings had and any business transacted at any meeting
of the stockholders or members, if within the powers or authority
of the corporation shall be valid even if the meeting be improperly
held or called, provided all the stockholders or members of the
corporation are present or duly represented at the meeting.
 TERM OF THE CORPORATION

• Sec. 11 Corporate Term – A corporation shall exist for a period

not exceeding fifty years (50) from the date of incorporation
unless sooner dissolved or unless said period is extended. The
corporate term as originally stated in the articles of
incorporation may be extended for periods not exceeding fifty
years (50) in any single instance by an amendment of the
articles of incorporation in accordance with this Code;
Provided, that no extension can be made earlier than five years
(5) prior to the original or subsequent expiry dates unless there
are justifiable reasons for an earlier extension as may be
determined by the SEC. (BP Blg. 68)
• The purpose of the limit emphasizes the contractual nature of the
corporation – the extension must be approved by the State.
 INCORPORATORS
OF THE CORPORATION

• INCORPORATORS are those stockholders or members

mentioned in the articles of incorporation as originally forming
and composing the corporation and who are signatories
thereof. (Sec. 5, BP Blg. 68)
• Any number of natural persons not less than five but not more
than fifteen, all of legal age and a majority of whom are
residents of the Philippines, may form a private corporation for
any lawful purpose or purposes. Each of the incorporators of a
stock corporation must own or be a subscriber to at least one
share of the capital stock of the corporation. (Sec. 10, BP Blg.
68)
• The AOI should specify the name, nationality & residence of
each incorporator.
 DIRECTORS OR TRUSTEES
OF THE CORPORATION

• Board of Directors/Trustees - the seat of corporate

powers in a corporation, all business conducted and
all property of the corporation is controlled and held
by the Board (Sec. 23, BP Blg. 68)
• The AOI shall contain the name, nationality and
residence (NNR) of the incorporating
directors/trustees.
• There should be at least five(5) but not more than
fifteen (15) directors/trustees of the corporation.
 CAPITAL STOCK

• Capital stock is the amount fixed in the articles of incorporation,

to be subscribed and paid in by the shareholders of a
corporation, either in money or property, labor or services, at the
organization of the corporation or afterwards and upon which it
is to conduct its operation. It represents the equity of the
stockholders in the corporate assets.
• Authorized capital stock is synonymous with capital stock where
the shares of the corporation have par value. If the shares of
stock have no par value, the corporation has no authorized
capital stock, but it has capital stock, the amount of which is not
specified in the articles of incorporation as it cannot be
determined until all the shares have been issued. In this case, the
two terms are not synonymous.
 TREASURER’S AFFIDAVIT

• Amount of capital stock to be subscribed and paid for the purposes

of incorporation – At least twenty- five percent (25%) of the
authorized capital stock as stated in the articles of incorporation
must be subscribed at the time of incorporation and at least twenty-
five percent (25%) of the total subscription must be paid upon
subscription, the balance to be payable on a date or dates fixed in the
contract of subscription without need of call, or in the absence of a
fixed date or dates, upon call for payment by the Board of Directors:
Provided however, that in no case shall the paid-up capital be less
than five thousand pesos (P5,000). [Sec. 13, BP Blg. 68]
• It means that of the authorized capital stock applied for, 25% thereof
must be subscribed. Of the 25% subscribed thereof must be paid up.
• This fact must be contained in the TREASURER’S AFFIDAVIT.
RECOMMENDATION FROM APPROPRIATE
GOVERNMENT AGENCY
RECOMMENDATION FROM APPROPRIATE
GOVERNMENT AGENCY
 AMENDMENT TO AOI

• Sec. 16 Amendment of Articles of Incorporation – Unless

otherwise prescribed by this Code or by special law and for
legitimate purposes, any provision or matter stated in the
articles of incorporation may be amended by a majority
vote of the board of directors or trustees AND the vote or
written assent of the stockholders representing at least
2/3 of the outstanding capital stock, without prejudice to
the appraisal right of dissenting stockholders in
accordance with the provisions of this Code, or the vote or
written assent of at least 2/3 of the members if it be a
non-stock corporation. (BP Blg. 68)
 AMENDMENT TO AOI
PROCEDURE

1. Majority vote of the BOD concerning the amendment of AOI(Sec. 16);

2. Notice to the stockholder together with the proposed amendment
(Sec. 50);
3. Affirmative votes of the stockholders representing 2/3 of the
outstanding shares;
4. Filing of the original and amended AOI, under oath (corporate
secretary and majority of the BOD), to SEC;
5. In case of banks, banking institution (see last par of Sec. 17), favorable
recommendation of the government agencies is necessary; and
6. Approval of SEC or non-action within six months from the date of
filing for causes not attributable to corporation will commence the
effectivity of the amendment.
 BY-LAWS

• Every corporation has the inherent right to adopt by-laws for

its internal government & to regulate the conduct &
prescribe the rights and duties of its members towards itself
& among themselves in reference to the management of its
affairs. (Gokongwei v. SEC, 89 SCRA 337 [1979])
• The by-laws of a corporation are its own private laws which
substantially have the same effect as the laws of the
corporation. They are in effect written into the charter. In this
sense, they become part of the fundamental law of the
corporation which the corporation and its directors and
officers must comply with.(Peña v. CA, 193 SCRA 717 [1991])
 BY-LAWS

• By-laws are not binding upon the SHs and members

absent the approval of the SEC. Absent the codal
provision, it is binding because of a corp.’s inherent
power to adopt its own by-laws
• By-Laws Cannot Be Contrary to Law and Charter
• By-Law Provisions Cannot Be Unreasonable or Be
Contrary to the Nature of By-laws
• By-Law provisions cannot discriminate
 BY-LAWS
ADOPTION PROCEDURE (SEC. 46, BP BLG. 68)

• Every corporation formed under this Code must, within one (1) month
after receipt of official notice of the issuance of its certificate of
incorporation by the Securities and Exchange Commission, adopt a code
of by-laws for its government not inconsistent with this Code. For the
adoption of by-laws by the corporation the affirmative vote of the
stockholders representing at least a majority of the outstanding capital
stock, or of at least a majority of the members in case of non-stock
corporations, shall be necessary. The by-laws shall be signed by the
stockholders or members voting for them and shall be kept in the
principal office of the corporation, subject to the inspection of the
stockholders or members during office hours. A copy thereof, duly
certified to by a majority of the directors or trustees countersigned by
the secretary of the corporation, shall be filed with the Securities and
Exchange Commission which shall be attached to the original articles of
incorporation.
 BY-LAWS
CONTENTS (SEC. 47, BP BLG. 68)

1. The time, place and manner of calling and conducting regular or

special meetings of the directors or trustees;
2. The time and manner of calling and conducting regular or
special meetings of the stockholders or members;
3. The required quorum in meetings of stockholders or members
and the manner of voting therein;
4. The form for proxies of stockholders and members and the
manner of voting them;
5. The qualifications, duties and compensation of directors or
trustees, officers and employees;
 BY-LAWS
CONTENTS (SEC. 47, BP BLG. 68)

6. The time for holding the annual election of directors of

trustees and the mode or manner of giving notice thereof;
7. The manner of election or appointment and the term of
office of all officers other than directors or trustees;
8. The penalties for violation of the by-laws;
9. In the case of stock corporations, the manner of issuing
stock certificates; and
10. Such other matters as may be necessary for the proper or
convenient transaction of its corporate business and affairs.
 AMENDMENT OF BY-LAWS
SEC. 48, BP BLG. 68

• The board of directors or trustees, by a majority vote thereof, and

the owners of at least a majority of the outstanding capital stock,
or at least a majority of the members of a non-stock corporation,
at a regular or special meeting duly called for the purpose, may
amend or repeal any by-laws or adopt new by-laws.
• The owners of two-thirds (2/3) of the outstanding capital stock or
two- thirds (2/3) of the members in a non-stock corporation may
delegate to the board of directors or trustees the power to amend
or repeal any by-laws or adopt new by-laws.
• The power delegated to the board of directors or trustees maybe
revoked by stockholders owning or representing a majority of the
outstanding capital stock or a majority of the members in non-
stock corporations, shall when they so vote at a regular or special
meeting.
 CORPORATE POWERS & AUTHORITY
SEC. 36, BP BLG. 68

1. To sue and be sued in its corporate name;

2. Of succession by its corporate name for the period of time stated
in the articles of incorporation and the certificate of
incorporation;
3. To adopt and use a corporate seal;
4. To amend its articles of incorporations;
5. To adopt by-laws, not contrary to law, morals or public policy,
and to amend or repeal the same;
6. In case of stock corporations, to issue or sell stocks to subscribers
and to sell treasury stocks in accordance with the provisions of
this Code; and to admit members to the corporation if it be a
non-stock corporation;
 CORPORATE POWERS & AUTHORITY
SEC. 36, BP BLG. 68

7. To purchase, receive, take or grant, hold, convey, sell, lease, pledge,

mortgage and otherwise deal with such real and personal property,
including securities and bonds of other corporations, as the
transactions of the lawful business of the corporation may
reasonably and necessary require;
8. To enter into merger or consolidation with other corporations as
provided in this Code;
9. To make reasonable donations, including those for the public
welfare or hospital or charitable, cultural, scientific, civic or similar
purposes: Provided, That no corporation, domestic or foreign shall
give donations in aid of any political party or candidate or for
purposes of partisan political activity;
 CORPORATE POWERS & AUTHORITY

10. To establish pension, retirement, and other plans

for the benefit of its directors, trustees, officers
and employees; and
11. To exercise such other powers as may be essential
or necessary to carry out its purpose or purposes
as stated in the articles of incorporation
 OTHER CORPORATE POWERS
EXTEND OR SHORTEN CORPORATE TERM

A private corporation may extend or shorten its term as stated

in the articles of incorporation when approved by majority vote
of the board of director or trustees and ratified at a meeting by
the stockholders representing at least 2/3 of the outstanding
capital stock or by at least 2/3 of the members in case of non-
stock corporation. Written notice of the proposed action and of
the time and place of the meeting shall be addressed to each
stockholder or member at his place of residence as shown on
the books of the corporation and deposited to the addressee in
the post office with postage prepaid or served personally.
Provided, that in case of extension of corporate term, any
dissenting stockholder may exercise his appraisal right under
the conditions provided in this code. (Sec. 37, BP Blg. 68)
 OTHER CORPORATE POWERS
INCREASE OR DECREASE CAPITAL STOCK

No corporation shall increase or decrease its capital stock or incur,

create or increase any bonded indebtedness unless approved by a
majority vote of the board of directors AND, at a stockholder’s
meeting duly called for the purpose, 2/3 of the outstanding capital
stock shall favor the increase or diminution of the capital stock, or
the incurring, creating, or increasing ant bonded indebtedness.
Written notice of the proposed increase or diminution of the capital
stock or of the incurring, creating, or increasing of any bonded
indebtedness and of the time and place of the stockholders meeting
at which the proposed increase or diminution of the capital stock or
the incurring or increasing of any bonded indebtedness is to be
considered, must be addressed to each stockholder at his place of
residence as shown on the books of the corporation and deposited to
the addressee in the post office with postage prepaid, or served
personally. (Sec. 38, BP Blg. 68)
 OTHER CORPORATE POWERS
INCUR, CREATE OR INCREASE BONDED INDEBTEDNESS

• Bond – security representing denominated units of indebtedness

issued by a corporation to raise money or capital obliging the
issuer to pay the maturity value at the end of a specified period
which should be not less than 360 days
• All properties of the corporation i.e. the business enterprise
comprise of the security of such bonded indebtedness.
• That is why not all indebtedness of the corporation requires the
ratification of the stockholders, only bonded indebtedness
require the ratification of the stockholders.
• A bond in contrast to a promissory note represents a unit of a
large indebtedness, whereas a promissory note represents a
single indebtedness and may stand on its own.
• Bonds issued by a corporation shall be registered with the SEC.
 OTHER CORPORATE POWERS
SELL OR DISPOSE ASSET

“xxx…a corporation may by a majority vote of its board of

directors or trustees, sell, lease, exchange, mortgage, pledge
or otherwise dispose of all or substantially all of its property
and assets including its goodwill, upon such terms and
conditions and for such consideration, which may be money,
stocks, bonds or other instruments for the payment of money
or other property or consideration as its board of directors or
trustees deem expedient, when authorized by the vote of
stockholders representing at least 2/3 of the outstanding
capital stock, or in the case of non- stock corporation, by the
vote of at least 2/3 of the members, in a stockholders’ or
members’ meeting duly called for that purpose. xxx” (Sec. 40,
BP Blg. 68)
 OTHER CORPORATE POWERS
INVEST CORPORATE FUNDS FOR NON-PRIMARY PURPOSE
ENDEAVOR

• “xxx…a private corporation may invest its funds in any other

corporation or business or for any purpose other than the
primary purpose for which it was organized when approved by
a majority of the board of directors or trustees and ratified by
the stockholders representing at least 2/3 of the outstanding
capital stock, or at least by 2/3 of the members in the case of
non-stock corporations, at a stockholders’ or members’
meeting duly called for that purpose. xxx” (Sec. 42, BP Blg 68)
 OTHER CORPORATE POWERS
DECLARE DIVIDENDS

• The board of directors of a stock corporation, may declare

dividends out of the unrestricted retained earnings which
shall be payable in cash, in property or in stock to all
stockholders on the basis of outstanding stock held by them.
(Sec. 43, BP Blg. 68)
• No stock dividend shall be issued without the approval of
stockholders representing not less than 2/3 of the
outstanding capital stock at a regular or special meeting duly
called for that purpose. (Sec. 43, BP Blg. 68)
• Stock corporations are prohibited from retaining surplus
profits in excess of 100% of their paid-in capital stock.
 OTHER CORPORATE POWERS
ENTER INTO MANAGEMENT CONTRACT

• No corporation shall conclude a management contract with

another corporation unless such contract shall have been
approved by the board of directors and by stockholders
owning at least the majority of the outstanding capital
stock, or by at least a majority of the members in the case of
a non-stock corporation of both managing and the managed
corporation at a meeting duly called for that purpose.
• Management Contract - any contract whereby a corporation
undertakes to mange or operate all or substantially all of the
business of another corporation, whether such contracts are
called service contracts, operating agreements or otherwise.
 WHERE CORPORATE POWER LODGED

• A corporation has no power except those expressly conferred on it by

the Corporation Code and those that are implied or incidental to its
existence. A corporation exercises said powers through its board of
directors and/or its duly authorized officers and agents.
• Physical acts of the corporation, like the signing of documents, can be
performed only by natural persons duly authorized for the purpose
by corporate by-laws or by a specific act of the board of directors.
(Shipside Inc. v. Court of Appeals, 352 SCRA 334 [2001]).
• Corporate powers are exercised by the Board of Directors, which
they may delegate to an executive committee, officers or managers.
• For such officers to be deemed fully clothed by the corporation to
exercise a power of the Board, the latter must specially authorize
them to do so. (ABS-CBN Broadcasting Corp. v. Court of Appeals, 301
SCRA 572 [1999]).
 ULTRA VIRES DOCTRINE
“ULTRA VIRES” - BEYOND ONE'S LEGAL POWER OR AUTHORITY

• No corporation shall possess or exercise any corporate powers

except those conferred by this Code or by its articles of
incorporation and except such as necessary or incidental to the
exercise of the powers so conferred. (Sec. 45, BP Blg. 68)
• A corporation is a creature of the law and has only such powers
and privileges as are granted by the State. The corporation should
only engage in transactions to which the stockholders and
members bind themselves by way of the provisions of the
purposes clause.
• Any act done by the corporation beyond its corporate powers is
an ULTRA VIRES act. These acts are those which are not illegal but
are merely voidable and may become binding and enforceable
when ratified by stockholders.
 TYPES OF ULTRA VIRES ACTS

• First Type Ultra Vires: An ultra vires act is one committed

outside the object for which a corporation is crated as
defined by the law of its organization and therefore
beyond the power conferred upon it by law.
• Second Type Ultra Vires: When the President enters into
speculative contracts, without prior board approval, and
without subsequent submission of those contracts to the
Board for approval or ratification.
 BOARD OF DIRECTORS/TRUSTEES

• All corporate powers, business conducted and all property of

corporations are exercised by the BOD/T (Sec. 23).
• BOD/T are selected thru an election and they shall hold office for
one year and until their successors are elected and qualified.
• Stockholders cannot interfere with the board’s exercise of its powers
and functions except when the law expressly gives them the
authority.
• Directors owe their duties to corporation rather than to individual
shareholders. The directors or trustees shall not act individually nor
separately but as a body in a lawful meeting.
• Contracts entered into without a formal board
resolution does not bind the corporation except
when majority of the board has knowledge of
the contract and the contract benefited the corporation.
 BOARD OF DIRECTORS/TRUSTEES
QUALIFICATION OF A DIRECTOR/TRUSTEE

• Natural person and is of legal age

• Holder of at least one (1) share or a member in case of non-stock
corporations
• Majority of directors must be Philippine residents. A foreign national
can be a director only in companies where the equity of the industry
isn’t limited or reserved only for Filipinos.
• Number of directors must be at least five (5), but not more than
fifteen (15)
• Have not been charged with a criminal offence for more than six (6)
years, or violates the Code within five (5) years prior to the election
• Have not been convicted of any violation
of the corporation code committed within
five (5) years prior to the date of his election
or appointment (Sec. 27, BP Blg 68).
 BOARD OF DIRECTORS/TRUSTEES
ELECTION

1. Notice to the stockholder/members of the election as

provided in AOI;
2. Presence of, in person or by proxy, majority of the
outstanding capital stock / member entitled to vote;
3. Election by ballot;
4. Candidate receiving highest number
of votes shall be declared elected; and
5. Report to the SEC, within 30 days,
the names, nationality and residences
of the elected officers and
directors/trustees.
Deaths and resignation must likewise
be reported.
 BOARD OF DIRECTORS/TRUSTEES
ROLES AND RESPONSIBILITIES

• Act on behalf of the corporation

• Attend and participate board
meetings
• Effectively monitor Management’s
performance to ensure
companies compliance with
applicable laws and best business practices
• Elect corporate officers and form quorum
 CORPORATE OFFICERS

• The officers execute polices laid down by the board and perform
the duties enjoined by them by the AOI and by-laws. Immediately
after the election of BOD/T, the directors of a corporation must
formally organize the election of:
• A president, who shall be a director;
• A treasurer who may or may not be a director;
• A secretary who shall be a resident and citizen of
the Philippines, and
• Such other officers as may be provided for in the by-laws (Sec. 25)
• Any two or more positions may be held concurrently by the same
person, except that no one shall act as president and secretary or
as president and treasurer at the same time.
 CHIEF EXECUTIVE OFFICER (CEO) OR
PRESIDENT
CORPORATE OFFICER

• Acts as a signatory of on behalf of companies and reports

to the corporation’s board of directors.
• Must be a natural person and is of legal age
• Must be a director
• A foreigner can be a president if the
industry is not secured only for Filipinos.
• The president shall preside at all meetings of
the directors or trustee as well as of the
stockholders or members, unless the by-laws
provide otherwise. (Sec. 54, BP Blg. 68)
 CHIEF FINANCIAL OFFICER (CFO) OR
TREASURER
CORPORATE OFFICER

• Responsible for almost all of the corporation’s financial

matters (i.e. annual statements, financial reports,
moneys, funds, securities, bonds and similar valuable
effects belonging to the corporation)
• Must be a natural person and is of legal age
• Does not have to be a director but must hold a Filipino
residency
• A foreigner in non-nationalized business
activities can be a treasurer but not in a
corporation with fully or partly nationalized
business activities.
 CORPORATE SECRETARY
CORPORATE OFFICER

• Handles all the corporation’s administrative and

informative work, safekeeping and preserve records,
documents and minutes of all meetings.
• Must be a natural person and is of legal age
• Must be a Filipino citizen and not just a resident of the
Philippines
• A person cannot be the President
and the Corporate Secretary at the
same time or the President and
Corporate Treasurer at the same
time.
 EXECUTIVE COMMITTEE

• The by-laws of a corporation may create an executive committee,

composed of not less than three members of the board, to be
appointed by the board (Sec. 35). Such committee may act on
specific matter within the competence of the board as may be
delegated by the by-laws or majority vote of the board, except
the following:
• Approval of any action for which shareholders' approval is also
required;
• Filing of vacancies in the board;
• Amendment, repeal or adoption of by-laws;
• Amendment or repeal of any resolution of the
board which by its express terms is not so
amendable or repealable; and
• Distribution of cash dividends to the shareholders.
 MEETINGS

• Stockholders’ Meetings
• Directors/Trustees’ Meetings
• Regular Meeting
• Special Meeting
 MEETING

• Every meeting (regular or special) should comply with

the following requisites to be considered as
authorized:
• A notice of such meeting
must be served
• A quorum (i.e. majority of
the outstanding capital stock
of the corporation) must be fully established
 STOCKHOLDERS’ MEETING
CONDUCT OF (SEC. 50, BP BLG. 68)

• Regular meetings of stockholders or members shall be held

annually on a date fixed in the by-laws, or if not so fixed, on any
date in April of every year as determined by the board of directors
or trustees.
• Written notice of regular meetings shall be sent to all stockholders
or members of record at least two (2) weeks prior to the meeting,
unless a different period is required by the by-laws.
• Special meetings of stockholders or members shall be held at any
time deemed necessary or as provided in
the by-laws: Provided, however,
That at least one (1) week written
notice shall be sent to all
stockholders or members, unless
otherwise provided in the by-laws.
 STOCKHOLDERS’ MEETING
PLACE AND TIME OF MEETINGS & QUORUM
(SEC. 51 & 52, BP BLG. 68)

• Whether regular or special, it shall be held in the city or

municipality where the principal office of the corporation is
located, and if practicable in the principal office of the corporation.
• Notice of meetings shall be in writing, and the time and place
thereof.
• All proceedings had and any business transacted at any meeting of
the stockholders or members, if within the powers or authority of
the corporation, shall be valid even if the meeting be improperly
held or called, provided all the stockholders or members of the
corporation are present or duly represented at the meeting.
• A quorum shall consist of the stockholders representing a majority
of the outstanding capital stock or a majority of the members in
the case of non-stock corporations.
 PROXY
SEC. 58, BP BLG. 68

• A proxy is a person who is designated by another to represent that

individual at a meeting or before a public body.
• It also refers to the written authorization allowing
one person to act on behalf of another.
• It may also refer to the authority to vote.
• Stockholders and members may vote in person or
by proxy in all meetings of stockholders or members.
• Proxies shall in writing, signed by the stockholder or member and
filed before the scheduled meeting with the corporate secretary.
Unless otherwise provided in the proxy, it shall be valid only for the
meeting for which it is intended.
 VOTING TRUST
SEC. 59, BP BLG. 68

• A voting trust is an arrangement whereby the shares in a company of

one or more shareholders and the voting rights attached thereto are
legally transferred to a trustee, usually for a specified period of time.
• A voting trust agreement is a contractual agreement in which
shareholders with voting rights transfer their shares to a trustee, in
return for a voting trust certificate. This gives the voting trustee
temporary control of the corporation.
• A voting trust agreement must be in writing and notarized, and shall
specify the terms and conditions thereof.
• A certified copy of such agreement shall be filed with the corporation and
with the SEC.
• No voting trust agreement shall be entered into for the purpose of
circumventing the law against monopolies and illegal combinations in
restraint of trade or used for purposes of fraud.
 DIRECTORS/TRUSTEES’ MEETINGS
SEC. 53, BP BLG. 68

• Regular meetings of the board of directors or trustees of every

corporation shall be held monthly, unless the by-laws provide
otherwise.
• Special meetings of the board of directors
or trustees may be held at any time upon
the call of the president or as provided
in the by-laws.
• Meetings of directors or trustees of corporations may be held
anywhere in or outside of the Philippines, unless the by-laws
provide otherwise.
• Notice of regular or special meetings stating the date, time and
place of the meeting must be sent to every director or trustee at
least one (1) day prior to the scheduled meeting, unless
otherwise provided by the by-laws.