Good Governance and Social Responsibility * The “life” or existence of a 

corporation, however, is not perpetual.

What is a corporation?
 An artificial being created by operation of law, having the right to
succession and the powers, attributes and properties expressly
authorized by law or incident to its existence (The Corporation Code
of the Philippines, Sec. 2)
Characteristics of Corporation:
Under our Corporation Code, the term of a corporation is limited
to a period not exceeding 50 years.
Dati kasi 50 yrs pero ngayon forever na
 Right of succession – continue to exist even in death, incapacity or
insolvency of any stockholder or members; it will not be dissolved
even when there are transfers of ownership.

 Artificial Being – personality is separate and distinct from its
owners.
*A corporation may not be made to answer for acts or liabilities
of its stockholders and vice versa. This is because of the separate
personality granted to the corporation.
*Puwede daw kasi ilipat yung ownership through trading of shares
 Powers, Attributes and Properties – it is authorized to do activities
within the purpose/s of its creation, it has its own traits, and it
operates based on what has been expressly provided in the charter.
*nakaka acquire siya ng mga properties under the corporation's name
without using the names of the owners.

 Created by operation of Law – will come into existence through a Certificate of Registration Parts
charter or a grant from the state. 1. CN 2015 (year) 0515 (identification)
* Sole proprietors must register with the Department of Trade & 2. Rights
Industry (DTI) while corporations, cooperative, partnerships, and 3. Do’s
foreign companies (e.g. Nestle, Phils.) are registered with the 4. Don’ts
Securities & Exchange Commission (SEC). 5. Name
6. Address
*A de facto corporation is a corporation that has been legally
recognized, even if it has not filed its Articles of Incorporation; STAKEHOLDERS OF A CORPORATION
corporation by fact but not by law. MANAGEMENT

*In most states, you only need one person to form a corporation.
Other state requirements vary, but usually no more than three
are required to legally incorporate. As part
of creating your corporation, you'll be required to fill out and file
what are known as Articles of Incorporation.
*Pero ilan required na roles sa corp - 3 (CEO, corporate secretary,
treasurer); president can’t be the treasurer at the same time but can be
corporate secretary.
 Refers to the party given the authority to implement the policies as
determined by the Board in directing the course/business activities of
the corporation.
* They are affected by corporation (performance bonuses, job, etc.)
* They influence the corporation by its actions, etc.
CREDITORS
 This refers to the party who lend to the corporation goods, services
or money.
* They are affected by corporation (payment of corporation) PURPOSES OF CORPORATION
* They influence the corporation by giving finances, source of funds, lends  Early Stage Survival – main objective of a corporation that has just
funding. started.
SHAREHOLDERS  To increase Profit
 This refers to people who invest their capital in the corporation.  To serve its purpose of existence which is to make
stockholders happy.
* They are affected by corporation (profits from shares, loss)
 To perform its contractual obligation to stakeholders
* They influence the corporation by source of funding
 To offer Vital Services to the General Public
EMPLOYEES
 To offer Goods and Services to the General Public
 These are the people who contribute their skills, abilities, and
 To offer Goods and Services to the Mass Market
ingenuity to the corporation.
SHAREHOLDERS
* They are affected by corporation by salaries, source of income
 Shareholders or Stockholders are artificial or natural persons that are
* They influence the corporation by manpower, corporation exists because of
legally regarded as owners of the corporation.
employees, skills.
STOCKHOLDERS OR SHAREHOLDERS RIGHT
CLIENTS
 The right to vote on matters such as elections of the board of
 They are the buyers of the corporation’s products and services.
directors.
* They are affected by corporation (product quality, satisfaction)
 The right to propose the shareholder resolution.
* They influence the corporation (customers)
 The right to receive dividends but outside creditors are the 1st
GOVERNMENT priority.

 It is the duty and responsibility of the government to provide the
people the basic ways and means to survive and the government gets
the biggest help from the corporation.
PUBLIC
BONDHOLDERS
 The result of responsible or irresponsible conduct of corporations can
affect public in so many ways.
 Pre-emption right/ Right to first refusal, which is right to purchase
new shares issued by the company.
 The right to liquidating dividends.
 Person or entity that is the holder of a currently outstanding bond.
 Major advantages: When in liquidation, bondholders and other
outside creditors are given priority over stockholders.
 Not exposed to fluctuation of interest rates.
 Interest payment usually takes place every six months.
  Life of the bond – short: 5 years, long: 25 years  Accountability – acknowledging and taking charge for and being
transparent about the impacts of the company’s policies, decisions,
BOARD OF DIRECTORS
products, and its associated performance.
 Refers to a collegial body that exercises the corporate powers of all  Prudence – care, caution, and good judgment; BOD is a body
corporations formed under the Corporation Code. responsible in safeguarding the interests of the organization through
DUTIES OF THE BOARD OF DIRECTORS good planning and management of finances and other resources of an
organization.
 Establishing Policies and Objectives
BENEFITS OF GOOD GOVERNANCE
 Selecting, appointing, supporting and receiving the performance of
the chief executive  Reduced Vulnerability – adopting good corporate governance
practices leads to an improved system of internal control.
 Ensuring the availability of adequate financial resources
 Marketability
 Approving annual budget
 Credibility – when a company is credible, investors’ trust comes
 Accounting to the stakeholders the organizations performance
next; where investors’ trust is in, money follows.
 Valuation
INTERNATIONAL CORPORATIONS
1) Multinational Corporations
2) Transnational Corporations

CORPORATE GOVERNANCE
 Structures or process by which companies are directed and controlled
that will help them to operate more efficiently, mitigate risk and
safeguard against mismanagement.

FUNDAMENTAL OBJECTIVES OF CORPORATE GOVERNANCE

1) Improvement of shareholder value
2) Conscious Consideration of the Interests of Other Stakeholders

WHAT GOOD GOVERNANCE PROMOTES?

 Transparency – aim includes maintaining investor, consumer, and
other stakeholders’ confidence.