Assignment No.5 1. Who may exercise the corporate powers of the corporation?

The corporate power is exercised by the Board of Directors. It is not exercised by the stockholders except in case of a close corporation, wherein the articles may provide that the corporate business shall be managed by the stockholders. In a stock corporation, the action of the stockholders on matters which may affect the corporation is only advisory and not in any way binding upon the corporation. 2. What are the instances when corporate powers are granted by the CCP to the stockholders or members instead of the Board of Directors and trustees? Corporation business is managed by the stockholders in case of close Corporation, removal of director, amendments of articles of incorporation, fundamental changes, declaration of stock dividends, entering into the management contracts, fixing of consideration of no par value shares and fixing of compensation of directors. 3. May members of the Board of Directors act by proxy or individually? Directors or trustees cannot validly act by proxy. They must attend the meeting of the board of directors or trustees and act in person and as a body. 4. Where a corporate officer may derive his authority and powers? A corporate officer may derive of his authority and powers conferred upon him by the board of directors or vested in him by the by-laws. 5. What is the term of office of the director? Directors in a corporation shall hold office for one (1) year. However, incumbent directors shall continue to be directors as long as their successors have not been elected and qualified under the doctrine of hold-over. 6. What are the powers of the hold over Board of Directors? Upon the failure of a quorum at any annual meeting the directorate shall hold over and continue to function until another directorate is chosen and qualified. It is therefore possible that a director can be a director even after one year as long as his successor has not been elected and qualified. 7. What are the qualifications of directors or trustees? a. For stock corporation 1. He must own at least one (1) share 2. It must be recorded in the books of the corporation. 3. Continuously he must own this one share otherwise he ceases to be a director. 4. Majority must be residing in the Philippines.

b. For non-stock corporation 1. Trustees of Non-stock Corporation must be members thereof. 2. Majority of the board of trustees must be residents of the Philippines. 8. May the laws of the corporation provide for additional qualification of directors or trustees? No. Only the by-laws can provide additional qualification of directors or trustees but their qualifications may not be modified if such modification would be in conflict or inconsistent with requirements prescribed by the corporation law. 9. Who are disqualified from being elected as directors? a. Persons convicted by final judgement of an offense punishable by imprisonment for more than six (6) years. b. Persons guilty of violating the new Corporation Code, committed within five (5) years prior to the date of election or appointment. 10. What are the requisites of derivatives suit? 11. What is a proxy? A proxy is a person who votes for and thus represents the corporate stockholders or member. Its life cannot exceed 5 years. A proxy is also understood, on the other hand, as the authority given by a stockholder to another to vote for him at a stockholder's meeting. 12. What is cumulative voting? The right of cumulative voting is a method of concentrating votes devised to give a sufficient minority of opportunity to secure representation in the Board of Directors. a. Stock Corporation- Any stockholder may vote the number of voting shares owned by him for as many persons as there are directors to be elected or he may cumulate said shares and give one candidate as many votes equal to the number of his shares multiplied by the number of directors to be elected, or he may distribute them on the same principle among as many candidates as he shall see fit. Thus, if there are five (5) directors to be elected, a stockholder who owns 100 voting shares shall be entitled to 500 votes which he may cast in favor of one candidate, or otherwise distribute among as many candidates as hall see fit. b. Non-stock Corporation- Cumulative voting is generally not available to members of a non-stock corporation. Unless otherwise provided in the Articles of Incorporation or in the by-laws, members of a non-stock corporation may cast as many votes as there are trustees to be elected but may not cast more than one vote for one candidate. Thus, if there are five (5) trustees to be elected, a voting member shall be entitled to five (5) votes which he may cast for five (5) trustees in the ratio of one (1) vote each.

13. Who are the officers of the corporation? And what are their qualifications? Corporate Officers 1. Directors of the corporation 2. President 3. Corporate Secretary 4. Corporate Treasurer 5. and others, stated in the by-laws Be it noted that the only officers of the corporation are those who are given that character either by the corporation law or by its by-laws. Such that even if you are a manager mentioned in the order of management but you are not stated in the articles or by-laws, you cannot be considered as an officer of the corporation. Officers and their Qualifications 1. President- He must be a director. 2. Treasurer- May or may not be a director. 3. Secretary- May or may not be a director but must be a resident and citizen of the Philippines, 14. What are the instances when the vote of the majority of all the members of the board and not merely the vote of the majority of the directors/trustees present shall be necessary? There are specific matters regarding the management of the corporation which requires the approval of at least the majority or two-thirds (2/3) of the outstanding capital stock (ocs) or two-thirds (2/3) of the members, such as: 1. the removal, increase or reduction of directors (2/3 of the ocs); 2. the increase or reduction of capital stock and increasing bonded indebtedness (2/3 of the ocs); 3. the amendment of the articles of incorporation (2/3 of the ocs); 4. the amendment, repeal or adoption of new by-laws (majority vote); or the delegation to the board of the power to amend, repeal or adopt new by-laws (2/3 of the ocs); or the revocation of the power given to the board )majority of the ocs); 5. entering into management contract (majority of the ocs, unless more than 1/3 of the ocs of the managing corporation is owned by any stockholders of either corporation or majority of the members of the board of the managing corporation also constitutes majority of the board of the managed corporation, in which case the vote required is 2/3 of the ocs; 6. the investment of corporate funds in other business (2/3 of the ocs); 7. the sale of all or substantially all of the corporate assets (2/3 of the ocs); 8. the authorization of the dissolution of the corporation (2/3 of the ocs); 9. the declaration of stock dividends (2/3 of the ocs); 10. in the merger or consolidation (2/3 of the ocs); and 11. the issuance of shares in exchange for property needed for corporate purposes

or in payment of previously contracted debt (2/3 of the ocs). 15. How may a director/ trustee be removed from office? A director of a corporation may be removed with or without a cause at a meeting called for that purpose by a vote of stockholders holding or representing at least two-thirds (2/3) of the outstanding capital stock, or, if the corporation be a non-stock corporation, by a vote of at least two-thirds (2/3) of the members entitled to vote. 16. May the Board of Directors grant compensation to themselves? Compensation of Directors General Rule- shall not receive any compensation Directors are entitled to compensation only when: 1. for reasonable per diems 2. stated in the by-laws 3. Resolution granting them compensation is approved by the vote of the stockholders representing at least a majority of the outstanding capital stock at a regular or special stockholder's meeting. In no case shall the total yearly compensation of directors, as such directors, exceed 10% of the net income before income tax of the corporation during the preceding year. Directors are precluded from fixing, increasing, and voting for compensation for themselves unless stated expressly by the charter or when authorized by the stockholders. 17. Are directors, trustees and officers personally liable for their acts as such? INSTANCES WHEN A DIRECTOR IS LIABLE: 1. Wilfully and knowingly voting for and assenting to patently unlawful acts of the corporation; 2. Gross negligence or bad faith in directing the affairs of the corporation; 3. Acquiring any personal or pecuniary interest in conflict of duty. 18. Are contracts between interlocking directors valid? Contracts with interlocking directors generally valid. According to Sec.33 Contract between corporation with interlocking directorsExcept in cases of fraud, and provided the contract is fair and reasonable under the circumstances, a contract between two or more corporations having interlocking directors shall not be invalidated on that ground alone: Provided, That if the interest of the interlocking director in one corporation or corporations is merely nominal, he shall be subject to the provisions of the preceding section insofar as the latter corporations are concerned. Stockholding exceeding twenty (20%) percent of the outstanding capital stock shall be considered substantial for purposes of interlocking directors.

19. What is the Doctrine of Corporate Opportunity? The rule that a director is made to account for any gains or profits from any transaction entered into by him or by another competing corporation where he has substantial interest which should have been a transaction undertaken by his corporation. It rests basically on the unfairness of an officer or director taking advantage of an opportunity for his own personal profit when the interest of the corporation justly calls for protection. 20. Powers and responsibilities of the Executive Committee. Management of a corporation may be delegated to an executive committee, provided the creation of such executive committee is provided in the by-laws of the corporation. The executive committee shall be composed of not less than three (3) members of the Board of Directors. They are appointed by the Board of Directors. Binding force of the executive committee To bind the corporation, the executive committee shall act by a majority vote of all its members.