Section 23

o
o

Corporate powers exercised by board of directors or
trustees

All corporation can only act through the aid of
individuals
o
Can only act through its board of
directors or trustees.
o
BOD is the governing body of corporation
chosen by SH
Stockholders elect a BOD to oversee management.
Directors are not controlled by SH who only have
indirect control thru their votes
o
Contracts between 3rd person and
corporation must made by BOD and not
SH. SH action is only advisory
o
Refusal of SH on a contract approved by
BOD is without effect
Directors act honestly – court not interfere. Court
cannot take control the discretion of BOD on
administrative matters

o
o
o
o

Qualification of Directors

Reason for the rule

Stockholders may have all the profits but they
must turnover the management to BOD. It is
clearly impractical to entrust the management of
corporate affairs to widely scattered SH that is
unfamiliar to the business

Limitation on power of BOD


Limitation imposed by constitution, statues and
rules and regulation
Cannot perform constituent acts that involves
major changing in the corporation
Cannot exercised power not possessed by
corporation
o
Directors are required to discharge their
duty in good faith, they’re liable if they
breach

BOD must act together in a meeting, not
individually. To exercise their power they must
meet in ameeting where there is a quorum.
Reason for the rule
o
Any action may be adopted after full
discussion
o
BOD has no other power than being a
board
Exception to the rule
o
Contract entered into without meeting is
binding only for corporation wherein
director is the sole stockholder
o
Corporation similarly bound by contract
entered
into
by
corporate
officer
authorized by directors
o
Corporation also bound by transaction
ratified in a meeting
o
By laws of corporation may create
executive committee to act in specific
matters
o
Corporation is allowed to delegate the
management of its affairs in another
corporation for a certain period of time
o
Any action made by director without
meeting is valid in a close corporation

Delegation of power of directors or trustees

Power of BOD may be delegated to other officers
Discretionary power which exclusively for BOD
cannot be delegated

Terms of office of directors or trustees

BOD shall
successors
quorum ,
directorate

hold office for 1 year until their
are elected and qualified. Failure of a
directors holds over until another
is chosen.

No. of directors

The limitation is to give ample representation to
SH of corporation but avoiding to become unwidely

Stock corporation
o
Every director must own atleast one share
o
Share of stock must be registered in his
name
o
Director must continuously own at least
one share during his term. Otherwise
cease
o
Majority of BOD must be resident citizen
Non-Stock Corporation
o
Must be members and majority must be
resident citizen
o
Domestic banks, 2/3 shall be Filipino
citizen

Stock ownership requirement

Power exercised by board of directors

Not be less than 5 not more than 15
Non stock – can be more than 15 but 1/3
of their number expiring every year
Close corporation – managed by SH than
directors.
NO MEETING
TO ELECT
DIRECTORS
Non stock educational corporation – more
than 15 number shall be multiple by 5,
1/5 of their number expiring every year
Corporation sole – no BOD
Board of trustees of religious societies –
not less 5 and more than 15

Person who holds legal title to the stock is
qualified. Legal title is what counts.
Person who transfers his shares in the books as a
plegde is not qualified to be director because he
use his shares as security only and not as
owner.]not disqualified if he merely pledged his
shares or enter into an executory contact to sell
Reason for the requirement
o
A man with a financial interest t stake will
devote more attention to the business
o
Professional competence rather than
financial contribution
o
Financial very small prone to carelessness

Additional qualification in the by-laws

Qualification of directors may prescribed by the bylaws but such modification cannot allow if its
contrary to requirements prescribed by corporation
of law.

Section 24
Election of directors or trustees






At the meeting, there must be present in person or
representative authorized to act by written proxy
Election must be by ballot, election by raising
hands or viva voces is valid except if request by
ballot
Stockholders cannot be deprived his rights to use
any methods of voting
No delinquent stock shall be voted
If quorum is present, candidates receive highest
vote shll be declared
Failure to hold election, meeting adjourned from
day to day or from time to time but cannot be
adjourned indefinitely
Requisite notice must be given

Methods of voting

Straight voting – may vote such no. of shares for as
many persons as there are directors
Cumulative voting for one candidate – give one
candidate as many votes as the no. of directors
times no. of shares
o
Privilege of CV is giving minority
representation in the BOD. SV cannot
elect director over objection of SH with
51% capital stock
o
Director elected because of minority
votes cannot be removed

Officers has a task on carrying details. he has from his office alone no more power over the corporate property and business o President shall preside at al meetings of the directors. Cumulative voting by distribution – SH may accumulate his shares by multiply shares and directors and distribute it as many candidates  Voting in a non stock corporation  Members my cast as many votes as there are trustees to be elected but may not cast more than one vote for one candidate  Section 25 Corporate officers and agents   Directors or trustees must elect by SH. of directors o Majority vote of directors present at meeting in which there Is quorum is suffivient to authorize action where the code reuires approval of corporate actssuch as declaration of dividends or entering into management contract o 9 directors. make proper entries of votes resolutions and proceedings of the SH and directors in the management of corporation Treasurer o Receive and keep the money if the president and to disbursed them o No inherent to bind corporation or borrow money in behalf of corporation o COMPTROLLER – control accounts and to check expenditure General manager o Has the power to bind the corporation by acts within scope o Person has the most control over affairs of corporation nd knowledge of all its business who cn act on his own responsibility. all officers or employees shall be elected by SH instead of directors. officers may elected directly by the members. President or other officers must be elected by directors. Vice-President o To act in the absence of president No authority by virtue alone to enter into contracts. Code does not prohibit a corporate officer from occupying the same position in another corporation. 5 direcotrs enough to hold meeting 3 votes to pass a board resolution. Some may required 7 directors. though they give certain executive duties Secretary o Must be resident of Philippines o Need not be a director o Make and keep records. Articles of incorporation in close corporation.e Proxy not allowed  Directors or trustee cannot validly act by proxy . and actual management. considered principal officer o  Requisites for board meeting     Meeting of directors duly assembled as a board Presence of quorum Decision of the majority of the quorum or majority of entire board Meeting at a place. time and in the manner in the by laws Quorum  Number of membership of a collective body as is competent to transact its business o Majority of the no. In nonstock. Extent of authority of corporate officers   President o Must be director of corporation but cannot act president and secretary or treasurer at the same time o Only officer required to be a member of BOD o Powers of the president are those only conferred him by the board or vested in him by the by laws o If nothing in by the by laws. Position concurrently held by same person     Any two or more position held concurrently by same person President and secretary or treasurer are incompatible due to its nature No prohibition against SH being a director of two or more corporation Corp. Directors formulates broad policy and directs conduct of business.