Corporat

e Powers
Defnition/
Concept
Applicabl
e
Provisio
n
Rules/Guidelines Limitations Voting
Requirements
Ratifcation
Requirement
Oter Remar!s
Power to
extend or
shorten
corporate
term
A private
corporation may
extend
or shorten its
term as stated in
the articles of
incorporation.
Sec. 37,
Corporati
on Code
Written notice of the
proposed action and of the time
and place of the meeting shall be
addressed to each
stocholder or member at his
place of residence as shown on
the boos of the corporation and
deposited to the addressee in the
post o!ce with postage prepaid,
or served.
"n case of
extension of
corporate term,
any dissenting
stocholder may
exercise his
appraisal right
#nder the
conditions
provided in the
code
Approved by a
ma$ority
vote of the
board of
directors or
tr#stees
rati%ed at a
meeting by
the
stocholders
representing
at least two&
thirds '()3* of
the
o#tstanding
capital stoc
or by at least
twothirds
'()3* of the
members in
case of non&
stoc
corporations
+ay be #sed as a means to
vol#ntarily dissolve a
corporation. S#ch vol#ntary
dissol#tion may be e,ected
by amending the articles of
incorporation to shorten the
corporate term (Sec. 120).
Power to
increase
or
decrease
capital
stoc-
inc#r,
create or
increase
bonded
indebtedn
ess
A private
corporation may
Sec. 3.,
Corporati
on Code
Prior written notice of the
proposed increase or decrease of
the capital stoc indicating the
time and place of meeting
addressed to each stocholder
m#st be made either by mail or
personal service-
A certi%cate in d#plicate signed
by a ma$ority of the directors of
the corporation, co#ntersigned by
the
chairman and the secretary of the
stocholders meeting-
/iling of the certi%cate with the
S0C- and
Approval thereof by the S0C.
"n case of
increase in capital
stoc, (12 of
s#ch increased
capital m#st be
s#bscribed and
that at
least (12 of the
amo#nt
s#bscribed m#st
be paid
either in cash or
property-
"n case of
decrease in
capital stoc, the
same m#st
not pre$#dice the
Approved by a
ma$ority vote of
the board of
directors
3ati%cation by
the
stocholders
holding or
representing
at least ()3 of
the
o#tstanding
capital
stoc at a
meeting d#ly
called for that
p#rpose
Ways of "ncreasing A#thori4ed
Capital Stoc5
a. 6y increasing)decreasing the
n#mber of shares
and retaining the par val#e-
b. 6y increasing)decreasing the
par val#e of existing
shares witho#t
increasing)decreasing the
n#mber
of shares-
c. 6y increasing)decreasing the
n#mber of shares
and increasing)decreasing the
par val#e.
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right of the
creditors-
Power to
deny pre&
emptive
right.
All stocholders
of a stoc
corporation shall
en$oy pre&
emptive right to
s#bscribe to all
iss#es or
disposition of
shares of any
class, in
proportion to
their respective
shareholdings,
#nless s#ch right
is denied by the
articles of
incorporation or
an amendment
thereto5
Sec. 37,
Corporati
on Code
Provided, 8hat s#ch pre&emptive
right shall not
extend to shares to be iss#ed in
compliance with laws re9#iring
stoc o,erings or
minim#m stoc ownership by the
p#blic- or to shares to be iss#ed in
good faith
s#ch right may be
denied by the
articles of
incorporation or
an amendment
thereto
Approval of the
stocholders
representing
two&thirds '()3*
of the
o#tstanding
capital
stoc, in
exchange for
property needed
for corporate
p#rposes or in
payment of a
previo#sly
contracted debt.
:enial of pre&emptive right
extends to shares iss#ed in
good faith in exchange for
property needed for corporate
p#rposes or in payment of
previo#sly
contracted debts.
Power to
sell or
dispose
other
assets
A private
corporation may
sell, lease,
exchange,
mortgage, pledge
or otherwise
dispose of all or
s#bstantially all
of its property
and assets,
incl#ding its
goodwill, #pon
s#ch terms and
conditions and for
s#ch
consideration,
which may be
money, stocs,
Sec. ;<,
Corporati
on Code
Written notice of the proposed
action and of the time and place
of the meeting shall be addressed
to each stocholder or member at
his place of residence as shown
on the boos of the corporation
and deposited to the addressee in
the post o!ce with postage
prepaid, or
served personally5 Provided, 8hat
any dissenting stocholder may
exercise his appraisal right.
S#b$ect to the
provisions of
existing laws on
illegal
combinations and
monopolies
6y a ma$ority
vote of its
board of
directors or
tr#stees
A#thori4ed by
the vote of
the stocholders
representing at
least two&thirds
'()3* of the
o#tstanding
capital stoc, or
in case of non&
stoc
corporation, by
the vote of at
"n non&stoc corporations where
there are no members with
voting rights, the vote of at least
a ma$ority of the tr#stees in
o!ce will be s#!cient
a#thori4ation for the corporation
to enter into any transaction
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bonds or other
instr#ments for
the payment of
money or other
property or
consideration,
as its board of
directors or
tr#stees may
deem expedient
least to two&
thirds '()3* of
the members, in
a stocholder=s
or member=s
meeting d#ly
called for the
p#rpose
Power to
ac9#ire
own
shares
A stoc
corporation shall
have the power
to p#rchase or
ac9#ire its own
shares for a
legitimate
corporate
p#rpose or
p#rposes
Sec. ;>,
Corporati
on Code
8hat the corporation has
#nrestricted retained earnings in
its boos to cover the shares to be
p#rchased or ac9#ired5
>. 8o eliminate fractional shares
arising o#t of stoc dividends-
(. 8o collect or compromise an
indebtedness to the corporation,
arising
o#t of #npaid s#bscription, in a
delin9#ency sale, and to p#rchase
delin9#ent shares sold d#ring said
sale- and
3. 8o pay dissenting or
withdrawing stocholders entitled
to payment for
their shares #nder the provisions
of this Code.
Power to
invest
corporate
f#nds in
another
corporatio
n or
b#siness
or for any
other
p#rpose
A private
corporation may
invest
its f#nds in any
other corporation
or b#siness or for
any p#rpose
other than the
primary
p#rpose for which
it was organi4ed
Sec. ;(,
Corporati
on Code
Written notice of the proposed
investment and the time and
place of the meeting shall be
addressed to each stocholder or
member at his place of residence
as shown on the boos of the
corporation and deposited to the
addressee in the post o!ce with
postage prepaid, or served
personally
Approved by a
ma$ority of the
board of
directors
or tr#stees and
rati%ed by the
stocholders
representing at
least two&thirds
'()3* of the
o#tstanding
capital stoc, or
Any dissenting stocholder shall
have appraisal right as provided
in this Code5 Provided, however,
8hat where the investment by
the corporation is reasonably
necessary to accomplish its
primary p#rposeas stated in the
articles of incorporation, the
approval of the stocholders or
members
shall not be necessary
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by at least two
thirds '()3* of
the members in
the case of
non&stoc
corporations, at
a stocholder=s
or member=s
meeting d#ly
called for the
p#rpose
Power to
declare
dividends
8he board of
directors of a
stoc corporation
may declare
dividends o#t of
the #nrestricted
retained earnings
which shall be
payable in cash,
in property, or in
stoc to all
stocholders on
the basis of
o#tstanding stoc
held by them
Sec. ;3,
Corporati
on Code
8hat any cash dividends d#e on
delin9#ent stoc shall %rst be
applied to the #npaid balance on
the s#bscription pl#s costs and
expenses, while stoc dividends
shall be withheld from the
delin9#ent stocholder #ntil his
#npaid s#bscription is f#lly paid
Stoc
corporations are
prohibited from
retaining s#rpl#s
pro%ts in excess
of one h#ndred
'><<2* percent of
their paid&in
capital stoc,
save to some
exceptions.
Approval of
stocholders
representing not
less than two&
thirds '()3* of
the o#tstanding
capital stoc at
a reg#lar or
special meeting
d#ly called for
the p#rpose
Stoc corporations are
prohibited from retaining s#rpl#s
pro%ts in excess of one h#ndred
'><<2* percent of their paid&in
capital stoc, except5 '>* when
$#sti%ed by de%nite corporate
expansion pro$ects or programs
approved by the board of
directors- or '(* when the
corporation is prohibited #nder
any loan agreement with any
%nancial instit#tion or
creditor, whether local or
foreign, from declaring dividends
witho#t its)his consent, and s#ch
consent has not yet been
sec#red- or '3* when it can be
clearly shown that s#ch
retention is necessary #nder
special circ#mstances obtaining
in the corporation, s#ch as
when there is need for special
reserve for probable
contingencies
Power to
enter into
managem
ent
contract.
A corporation
may concl#de a
management
contract with
another
Sec. ;;,
Corporati
on Code
'>* where a stocholder or
stocholders
representing the same interest of
both the managing and the
managed corporations own or
Approved by the
board of
directors and by
stocholders
owning at least
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corporation control more than one&third '>)3*
of the total o#tstanding capital
stoc entitled to vote of the
managing corporation- or '(*
where a ma$ority of the members
of the board of directors of the
managing corporation also
constit#te a ma$ority of the
members of the
board of directors of the managed
corporation, then the
management contract m#st be
approved by the stocholders of
the managed corporation owning
at least two&thirds '()3*
of the total o#tstanding capital
stoc entitled to vote, or by at
least two&thirds '()3* of the
members in the case of a non&
stoc corporation. ?o
management contract shall be
entered into for a period longer
than %ve years for any one term
the ma$ority of
the o#tstanding
capital stoc, or
by at least a
ma$ority of the
members in the
case of a
non&stoc
corporation, of
both the
managing and
the managed
corporation, at a
meeting
d#ly called for
the p#rpose
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