WHAT IS CORPORATION?
Promoter’s contract
Section 1. Title of the Code. - This
Code shall be known as "The
Corporation Code of the
Philippines".
Section 2. Corporation defined. -
A corporation is an artificial being
created by operation of law, having
theright of succession and the
powers, attributes and properties
expressly authorized by law or
incident to its existence
Corporation as artificial being.
- The Corporation Code has
embodied the accepted concept of a
corporation as an “artificial” being.
- A corporation is given by law with
rights, powers and liabilities usually
accorded a natural person.
Other attributes of a corporation.
- Aside from a corporation being
considered as an artificial being it
has other attributes like it is created
by operation of law.
Right of Succession.
- A private corporation may
continue regardless of the death,
insolvency, incapacity of any of its
directors, officers or employees,
and regardless of transfer of shares
from one stockholder to another.
Power, attributes and properties.
- A corporation beimg a mere
creation of law, has such powers
only has expressly, or impliedly
conferred upon it by the Charter or
act of incorporation.
Created by Operation of law.
- A corporation comes into being by
authorities of the state.
Corporate nationality
- It is recognized doctrine of
corporate law that a private
corporation is a national, citizen,
resident, or inhabitant of the
country or state, by or under the
laws of which it was created or
organized.
COMPONENTS OF A
CORPORATION:
1. Corporators
-those who compose a corporation,
whether as stockholders or as
members.
2. Incorporators
- those stockholders or members
mentioned in the articles of
incorporation as originally forming
and composing the corporation and
who are signatories thereof
3. Stockholder or Shareholders
- those corporators in a stock
corporation.
4. Members
- those corporators in a non-stock
corporation.
5. Incorporator and corporator
distinguished
* Incorporators
- refers to those natural person
whose names appear in the articles
of incorporation as originally
forming and composing the
corporation and who are signatories
thereof.
* Corporators
- refers to all persons who compose
the corporation at any given time
and need not to be signatories to the
article of the corporation.
6. Capacity of Incorporators
- incorporators of a corporation is in
legal effect a contract between the
organizers and the state.
7. Promotion
- is the act of procuring finances
and the making all preparations
necessary to launch a corporation.
8. Activities of promoter
- the promoter in the fullest sense,
performs various services in
launching an enterprise and may
employ experts, lawyers, bankers,
solicitors and other persons to aid
him.
9.
- a corporation is not bound by any
agreement made by a promoter on
its behalf, unless and until the
corporation approves the agreement.
WHAT IS BOARD OF
DIRECTORS?
- BODs consists of elected
individuals who serves as advisor to
a corporation and act as proxy for
shareholders. Both for-profit and
nonprofit corporations as well as
some government agencies have
BODs.
BOARD OF DIRECTORS
COMPOSITION
- A BOD is composed of members
who are appointed or elected by the
general shareholder membership.
- In non-profit, non-stock
corporations, it may be named as
board of governors, board of
regents, or board of trustees.
- Theoretically, the control of a
company is divided between the
board of directors, and the
shareholders as a single body.
- The BOD members are elected by
shareholders of record during the
Annual Meeting of the corporation.
Term of office is one (1) year.
- All elected directors must own at
least one (1) share of stock of the
corporation.
- The number of directors is
determined in the company’s
Articles of Incorporation and By-
Laws, in accordance with the
Philippine Corporation Code
- The minimum number of BOD is
five (5) and the maximum is 15
members.
ORGANIZATIONAL THEORY
- It enables the manager to see that
his or her organization and its
problems are rarely wholly unique.
3 Criteria for Effective
Organizations:
1. They must be organized for
business performance.
2. Their structure should contain the
least number of management levels.
3. Organizational structure should
facilitate training & testing of future
organizationa lleaders.
ORGANIZATIONAL
STRUCTURE
- The pattern of relationships
among positions the organization
and among members of the
organization. The purpose is the
division of work among members
of the organization, and the
coordination of their activities.
Structures defines tasks and
responsibilities, work roles and
relationships and channels of
communication.
OBJECTIVES OF AN
ORGANIZATIONAL STRUCTURE
1. Accountability for areas of work
undertaken by groups and
individual members of the
organization.
2. Coordination of different parts of
the organization and different areas
of work.
3. Effective & efficient
organizational performance
including resource utilization.
4. Monitoring the activities of the
organization.
5. Flexibility in order to respond to
changing environmental factors.
6. Social satisfaction of members of
the organization.
5 BASIC CATEGORIES OF
ORGANIZATIONAL DESIGN
& DIAGNOSIS
1. Simple Structure – centralized
2. Machine Bureaucracy – many
layers of management and formal
procedures
3. Professional Bureaucracy – set
by independent professional bodies
4. Divisionalized Bureaucracy –
applies to multinational/ industrial
5. Adhocracy- often found in new
technology industries
CHARACTERISTICS OF THE - Corporate governance directly
MACHINE BUREAUCRACY impacts the profits and reputation of
1. High Functional Specialization the company, and having poor
2. High Formalization policies can expose the company to
3. High Centralization lawsuits, fines, reputational damage,
4. Simple & Stable Environment and loss of capital investment. Here
5. Mechanistic Structure are five common pitfalls your
corporate governance policies
should avoid
CONFLICTS OF INTEREST
- Avoiding conflicts of interest is
vital. A conflict of interest within
the framework of corporate
governance occurs when an officer
or other controlling member of a
corporation has other financial
interests that directly conflict with
the objectives of the corporation.
When conflicts of interest are
present, they deteriorate the trust of
shareholders and the public while
making the corporation vulnerable
to litigation.
ADHOCRACY
- Loose, flexible, and organic OVERSIGHT ISSUES
structure - Effective corporate governance
- Characteristics requires the board of directors to
- Don't believe in hierarchy, rule have substantial oversight of the
books, dress codes, etc... company’s procedures and practices.
- Ambiguous authority structure Oversight is a broad term that
- Unclear objectives encompasses the executive staff
- Contradictory assignments reporting to the board and the
board’s awareness of the daily
TYPES OF operations of the company and the
ORGANIZATIONAL way in which its objectives are
STRUCTURE being achieved.
1. FUNCTIONAL - The board protects the interests of
2. PRODUCT/SERVICE the shareholders, acting as check
3. GEOGRAPHICAL and balance against the executive
4. DIVISIONAL staff. Without this oversight,
5. MATRIX-groupings of projects corporate staff might violate state or
& functions federal law, facing substantial fines
from regulatory agencies, and
COMMON ISSUES THAT suffering reputational damage with
ARISE IN CORPORATE the public.
GOVERNANCE
- Corporate governance is the term ACCOUNTABILITY ISSUES
used to describe the balance among - Accountability is necessary for
participants in the corporate effective corporate governance.
structure who have an interest in the From the top-level executives to
way in which the corporation is run, lower-tier employees, each level
such as executive staff, and division of the corporation
shareholders and members of the should report and be accountable to
community. another as a system of checks and
balances. Above all else, the actions
of each level of the corporation is
accountable to the shareholders and
the public. Without accountability,
one division of the corporation
might endanger the success of the
entire company or cause
stockholders to lose the desire to
continue their investment.
TRANSPARENCY
- To be transparent, a corporation
must accurately report their profits
and losses and make those figures
available to those who invest in
their company. Overinflating profits
or minimizing losses can seriously
damage the company’s relationship
with stockholders in that they are
enticed to invest under false
pretenses. A lack of transparency
can also expose the company to
fines from regulatory agencies.
ETHICS VIOLATIONS
- Members of the executive board
have an ethical duty to make
decisions based on the best interests
of the stockholders. Further, a
corporation has an ethical duty to
protect the social welfare of others,
including the greater community in
which they operate. Minimizing
pollution and eschewing
manufacturing in countries that
don’t adhere to similar labor
standards as the U.S. are both
examples of a way in which
corporate governance, ethics, and
social welfare intertwine.
Introduction to Ethics • INDIVIDUAL LEVEL
- Ethics is the rational reflection on – Relating to the behavior or conduct
what is right, what is wrong, what is of an individual.
just, what is unjust, what is good
and what is bad in terms of human FEATURES OF BUSINESS
behaviour. ETHICS
- Ethics refers to the evaluation of • Code Of Conduct
moral values, principles and • Based On Moral And Social
standards of human conduct and its Values
application in daily life to • Discipline
determine acceptable human • Provides Basic Framework
behaviour . • Voluntary
- Some ethical principles are: • Relative Term
o Truthfulness • New Concept
o Honesty • Personal Dignity
o Loyalty • Related To Human Aspect
o Respect • Study Of Goals And Means
o Fairness • Requires Education And Guidance
o Integrity • Greater Than Law
• Gives Protection To Social
ORIGIN OF ETHICS Groups
- The word Ethics is derived from • Business Social Relationships
the Latin word ‘Ethicus’ & the • Different From Social
Greek word ‘Ethikos’ Responsibility
- Ethics are an arrangement of • Not Against Profit Making
decent principles and a branch of
attitude which defines what is good TYPES OF BUSINESS ETHICS
for individuals and society. > Meta-ethics
- There are many known figures in - Study of origin and meaning of
the history of ethics, Greek ethical concepts.
philosophers Plato and Aristotle, > Normative ethics
modern influencers include such - Study of principles, rules or
people, as Immanuel Kant, Jeremy theories that guide our actions and
Bentham, John Stuart Mill, D.W. judgements
Ross, C.L. Stevenson, Alasdair > Applied ethics
MacIntyre & John Rawis. - Analysis of specific, controversi al,
moral issues like abortion, animal
WHAT IS BUSINESS ETHICS? rights.
- Business ethics (also Corporate > Descriptive ethics
ethics) is a form of applied ethics or - Morals of society describing how
professional ethics that examines people behave.
ethical principles and moral or
ethical problems that arise in a SOURCES OF BUSINESS ETHICS
business environment. It applies to
all aspects of business conduct and
is relevant to the conduct of
individuals and entire organization.
LEVELS OF BUSINESS ETHICS
• MACRO LEVEL
– Relating to conduct of business in
economic, political, legal and social
systems.
• CORPORATE LEVEL
– Relating to ethical standards
embedded in the policies and
procedures of the organization.
 IMPORTANCE OF BUSINESS
ETHICS
• Goodwill
• Profitability
• Survival of business
• Healthy competition
• Customer satisfaction
• Safeguarding customer rights
• Protecting employees and
shareholders
• Smooth function of business
• Consumer movement
• Importance of labor
SCOPE OF BUSINESS ETHICS
> Ethics in Compliance
- Compliance is about obeying and
adhering to rules and authority. The
motivation for being compliant
could be to do the right thing out of
fear of being caught rather than a
desire to be abiding by the law.
> Ethics in Finance
- The ethical isues in finance that
companies and emloyees are
confronted with include:
• In accounting – window dressing,
misleading financial analysis.
• Related party transactions not at
arm’s length
• Insider trading, securities fraud
leading to manipulation of the
financial markets.
• Executive compensation.
• Bribery, kickbacks, over billing of
expenses, facilitation payments.
• Fake reimbursements.
> Ethics and human resource
management (HRM)
• Objectives
- Identify factors in the emergence
of the debate on ethical issues in
HRM.
- Describe and discuss basic ethical
theories and principles.
- Understand issues involved in the
consideration of rights and
responsibilities in the employment
relationship.
- Understand issues involved in the
consideration of fairness and justice
in the employment relationship.
- Identify challenges to the
ethicality of HRM.
Why ethics are important in HRM?
• Ethics
- General term commonly used to
refer to both moral beliefs and
ethical theory.
• The study of ethics in the HRM
context is important because of
dynamic and interrelated shifts in
the organisation of work.
- Changes in international
economies
- Changes at the national level in
policy and institutional structures
- Changes at the enterprise level in
the policies, systems and practices
of employment
> Ethics in Human Resources
- HRM plays a decisive role in
introducing and implementing
ethics. Ethics should be a pivotal
issue for Human Resource specialist.
The ethics of human resource
management covers those ethical
issues arising around the employer-
employee relationship, such as the
right and duties owed between
employer and employee.
WHO IS AN EMPLOYER?
- The employer is the organization
or company which puts to work,
employs or hires the services of the
employee. The employer has the
mandate of compensating the
services rendered by the employee
in a way which is agreed upon by
both parties in the employment
contract or as per the organization’s
policy.
- An employee is a person who
works for an organization or a
company on a part-time or full-time
basis and receives compensation for
the services rendered in form of a
salary. An employee is hired for a
specific job or just to provide labor
and does his/her work in the service
of another entity, mostly the
employer.
The rights and responsibilities of
employers and employees
• Human rights
-The right of people, particularly
vulnerable people, to moral
protection.
• Rights and duties of employees
- Suggests that employees are seen
to have rights and duties that not
only encompass basic human rights
and duties but also take into account
the particular demands of the work
setting.
Rights and duties of employees
> Rights
- Right to freedom from
discrimination
- Right to privacy
- Right to due process
- Right to collective
bargaining and association and the
right to strike
- Right to healthy and safe
working conditions
- Right to freedom of
conscience and speech
- Right to work
> Duties
- Duty to comply with
labour contract
- Duty to comply with the
law
- Duty to respect the
employer's property
Beyond basic rights and duties
> Rights
- Right to meaningful work
- Right to employability
> Duties
• Whistleblowing
- Reporting outside an organisation
on activities, within an organisation,
that have the potential to cause
serious harm to the public.
Issues of justice and fairness in
the employment relationship
> Organisational justice
- Reflects individual or group
perceptions of fairness within an
organisation and behavioural
reactions to such perceptions.
> Distributive justice (also
distributive fairness)
- The perception that rewards are
distributed in relation to
contribution.
> Procedural justice (also
procedural fairness)
- A concept of justice focusing on
the methods used to determine the
outcomes received.
> Interactional justice (also
interpersonal fairness).
- Refers to the quality of
interpersonal treatment in processes.
The ethicality of HRM
- Refers to the ethical endowment
or quality of HRM- that is, the
extent to which HRM possesses
such qualities.
- The HR manager or HR function:
- The moral development of
managers
- 'Rules' for a moral
manager
- Duality of roles or conflict
of interest
- HRM in the enterprise
- Ethical leadership and
culture
- Strategic HRM or HRM
as a strategic tool?
- High-commitment HRM
* A management approach
that emphasises employee
engagement, participation in
decision making and systemic
relationships between technical,
social and other organisational
elements.
- HRM in society
- The commodification of
labour
- The suppression of
pluralism and collectivism
Summary
- Ethical theories provide
frameworks for assessing whether
something is right or wrong
- Important ethical issues for HR
managers include:
- Understanding the rights
and responsibilities of employers
and employees
- Understanding justice and
fairness in the employment
relationship
- Considering the ethicality
of HRM
- Considering the role of
HRM in society.
> Ethics in Marketing
- Pricing: price fixing, price
discrimination, price skimming
- Anti-competitive practices like
manipulation of supply, exclusive
dealing arrangements, tying
arrangements etc.
- Misleading arrangements.
- Content of adertisements.
- Children and marketing.
- Black markets, grey markets.
> Ethics in Production
- Defective, addictive and
inherently dangerous products
- Ethical relations between the
company and the environment
include pollution, environmental
ethics, and carbon emissions trading.
- Ethical problems arising out of
new technologies for example
Genetically modified food
- Product testing ethics
Principles of Business Ethics
1. Honesty
2. Integrity
3. Accountability
4. Loyalty
5. Fairness
6. Concern for Others
7. Respect for Others
8. Law Abiding
9. Commitment to Excellence
10. Leadership
11. Reputation & Morale
12. Promise-Keeping &
Trustworthiness
CUSTOMERS RIGHTS
- It is generally a reference to a
body of law that pertains to things
the producers of goods must do to
protect customers from harm. These
laws have come into existence
through series of legal disputes, and
have been shaped by results of
those cases. In few instances, some
states have actually codified
regulations that they refer to as
consumer rights laws, but this is not
yet the majority practice, and even
these codifications may not cover
all of the principles that are
generally considered consumer
rights.
> The Right to be Heard
- Every consumer has the right to be
heard after being exploited. An
upset consumer should be aware
that he/she possesses the right to
take the matter to the authorities if
the company does not hear them out.
The right to be heard is a powerful
right at the disposal of the consumer.
> The Right to Seek Redressal
- Every consumer has the right to
seek out for justice. Upset
consumers who have been a victim
of corporate exploitations can take
the matter to the redressal agencies
and file a suit against the insensitive
company. This right is often put to
ill use by many consumers and is
hence a very delicate right.
> The Right to Information
- Every consumer has the right to
information. Consumers should be
provided with truthful and genuine
information. Information should not
have an ill purpose and should not
be incorrect. In other words,
consumers have the right to truthful
information.
> The Right to Protection
- Every consumer has the right to
protection. Central Consumer
Protection Council, State Consumer
Protection Council, District Forum
and Consumer Protection Redressal
Agencies are at the disposal of the
consumers. These institutions aim
at protecting Indian consumers from
exploitative companies.
> The Right to Assurance
- Every consumer has the right to
assurance. Assurance of qualitative
goods and qualitative services.
They also have the right to the
assurance of the variety of
commodities and services at their
disposal.
> The Right to Consumer
Education
- Every consumer also has the right
to receive consumer education. This
education is often a part of every
consumer protection act and
amendment. The government
should make immense effort to - Respect the confidentiality of info
share and spread the consumer acquired in course of business
rights to every remote area. except authorized
Consumers should also receive the - Adhere to and promote this code
right to be educated. This is a very of Ethics.
informative and knowledgeable
right at the disposal of the ETHICAL ISSUES IN FINANCE
consumers. - Insider Trading
- Financial Markets
ETHICS & LAW - Hostile Takeovers
> Ethics - Financial Statements
- Described by unwritten principles
- Interpreted by each individual
- Presented by philosophers,
religions, professional groups
- Personal choice
- Priority determined by an
individual if two principles conflict
- No external arbiter
- Limited enforcement
> Law
- Decribed by formal, written
documents
- Interpreted by courts
- Established by legislatures
representing all people
- Applicale to everyone
- Priority determined by courts if
two laws conflict
- Court is final arbiter of “right”
- Enforceable by police and courts

ETHICS IN FINANCE
- Ethics I in finance is one of the
main things which everyone has to
follow from small, medium and big
level company.
- It is considered important as
without financial component, no
business can run for a long time.
- Ethics in finance may vary from
industry to industry but everyone is
liable to do their work at utmost
good faith.

CODE OF ETHICS IN
FINANCE
- Act with honesty and integrity
avoiding conflicts of interest in
personal an professional
relationship
- To provide information which is
full, accurate, fair, objective, timely
and understandable.
- To promote ethical behavior
among other associates