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, theyre 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

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.

President or other officers must be elected by
directors. Directors formulates broad policy
and directs conduct of business. Officers has a
task
on
carrying
details,
and
actual
management.
Articles of incorporation in close corporation,
all officers or employees shall be elected by
SH instead of directors. In nonstock, officers
may elected directly by the members.

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. Code does not prohibit a corporate officer
from occupying the same position in another
corporation.

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, 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.
Vice-President
o
To act in the absence of president

No authority by virtue alone to enter into

contracts, though they give certain
executive duties
Secretary
o
Must be resident of Philippines
o
Need not be a director
o
Make and keep records, 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, 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. 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, 5 direcotrs enough to hold
meeting 3 votes to
pass a board
resolution.
Some
may
required
7
directors.e

Proxy not allowed

Directors or trustee cannot validly act by proxy